India’s ₹1 Lakh Crore RDI Push: Fueling the Next Deeptech Revolution

Prime Minister Narendra Modi has officially launched the ₹1 lakh crore Research, Development & Innovation (RDI) Fund, marking a bold move to turn India’s R&D potential into globally competitive, market-ready technologies. The fund is designed to bridge the gap between lab research and commercialisation, focusing on deeptech domains such as semiconductors, artificial intelligence, quantum computing, and advanced materials.

In an interaction with CiOL, Ranjeet Shetye, Venture Partner at YourNest Venture Capital and Managing Director at Everstream Analytics, shared his views on making the RDI Fund work—from avoiding “grant-to-paper-to-shelf” outcomes to creating a disciplined, scalable innovation framework.

Interview Excerpts: 

What specific mechanisms should the ₹1 lakh crore RDI Fund adopt to ensure scientific research actually reaches the market—and avoid the historic "grant-to-paper-to-shelf" trap in India's innovation programmes?

India has always been great at building new things, but we tend to be low on the energy and momentum required to keep those items or programmes operating at the original quality and experience. Here are some ways to structure the program for long-term resiliency, with some self-governance mechanisms built in.

India needs long-term science investments (10–20-year horizon) that are isolated from commercial pressures and also medium-term engineering investments (5–9-year horizon) that are not isolated from commercial pressures.

Fund allocation should be structured along parameters such as:

• Long-term Science versus medium-term Engineering

• National priorities, e.g., electromagnetic spectrum manipulation, USV swarms

• Stage of the startup, or TRL level of the academic R&D

This combined approach should help India achieve long-term successes in specific long-term deep science areas while enabling more ventures with higher risks in the medium-term engineering areas.

The Fund should identify a highly focused volunteer force with extensive experience – 500 technologists/founders and 500 VCs/super angels/founders nationally – who are empanelled to review the Fund participants. The technologists would be from academia (200), industry practitioners (100), and founders with large exits/IPOs (200), while the VCs (350)/super angels (50)/founders (another 100) would be focused on unit economics, sales funnels, GTM, etc. This mix of experts, focus, and experience enables a robust review of any startup and ensures its alignment with the Fund’s objectives at every stage.

So, if a startup gets thumbs up from any 3 tech reviewers after a technology hygiene review and thumbs up from any 3 business reviewers after a business hygiene review (with double-blind voting and limited slots given to startups, i.e., they cannot approach all 500, but only some 25 – 1 chosen, 24 randomly allocated), the startup should be allowed to automatically proceed on its funding journey with the fund.

This volunteer force, being largely financially self-sufficient, would be more enthusiastic about social recognition (e.g., IAS status, without the concomitant restrictions), which they retain as long as they are a part of the programme and contribute to the nation’s growth.

We may also add specialists, such as Health Care, Nuclear, etc., as the Fund deems fit.

Deep tech requires patient capital and long gestation. How can the RDI Fund be structured to crowd in private venture capital rather than replace it—especially at the Pre-Series A and Series A stages?

When government money floods in without private money alongside it, private investors stay away. That's backwards.

The fund should only pay for half of a project's cost. Private investors have to cover the other half. This way, if private investors won't touch it, the government money doesn't go in either. A venture capitalist's vote of confidence matters.

But there's a gap nobody wants to fill. A deep-tech startup needs five to ten crore rupees to prove itself. Most angel investors and early-stage venture capitalists skip this phase because it's risky and takes ten to fifteen years before they see returns. The government fund should specialize in this exact gap, with a commitment to wait three to five years. Once a startup proves its technology actually works in the real world, venture capitalists jump in.

Look at semiconductors and artificial intelligence in India. We have the talent, but we don't have enough investors willing to write fifty to one hundred crore cheques for startups that won't make money for seven years. That's where the RDI Fund becomes valuable. It de-risks early bets. Then, when a startup succeeds, global funds like Microsoft or Khosla Ventures come in. The government money does the hard work upfront, and private capital scales what works.

Among semiconductors, biotech, AI, quantum, and advanced materials—which two deep-tech domains should India prioritise for near-term strategic impact, and which should be treated as 10- to 15-year bets? What trade-offs does that imply?

India needs to make hard choices about where to place bets and where to sit back and wait.

Pick these now (five to seven years): India is strong in biotech, medium strength in advanced materials and quantum, and weak in semiconductors and AI.

Semiconductors impact national digital security and national physical security. The global chip market is fragile. If one country shuts down the supply, we're crippled. India must build its own chip manufacturing and design capability. We're already spending 76,000 crore on this. Double down and build ten to fifteen factories here.

On artificial intelligence, we can win by going cheap and practical. If we aim for a decentralised and energy-efficient approach in AI, along with semiconductor advances, we may not need the kind of energy capacities that are being projected for AI datacenters. We can build artificial intelligence that works with Indian laws and Indian businesses at low energy usage, in Indian languages. That pays off for all citizens in three to five years.

Wait on these (ten to fifteen years): Quantum computers and advanced materials. Quantum will eventually solve drug design, materials science, and complex financial problems, but we're still a decade away from it being a regular occurrence. Biotech is a hybrid. Some areas, like gene therapy, move faster, but the foundational science still needs ten to fifteen years.

The uncomfortable truth: you can't fund everything. If you spread money across all five domains equally, you end up with five half-baked efforts. Countries that win pick two or three and go all in. America picked aerospace and semiconductors from the 1960s to the 1980s. Taiwan picked semiconductors. Israel and Turkey bet on drones. Iran bet on drones and hypersonics. India has to make the same ruthless choices.

Patent filings are rising, but commercialisation remains limited. Beyond patent counts, what success metrics should define the RDI Fund—such as TRL progress, spin-outs, manufacturing localisation, and export-ready IP?

Patents are useful but only in the context of their real-world applicability. Build quickly, fail early, learn fast, and leap forward – that is what we need.

Failure is not a problem, but the inability to learn from failures is. The magic words for a founder must be curiosity, critical thinking, and challenging the status quo.

I think if we build the structure of technologists and business reviewers as outlined above, it provides a very robust and dynamic framework where our best minds would adapt constantly to best practices without the Fund being forced to pick any specific success metric.

Having said this, investors do look for:

• Are the Founders robust individually? Robust as a team?

• Is at least one founder a subject matter expert in the problem space being pursued?

• Does the problem space support a practical market innovation/disruption?

• Does the growth plan make sense from a GTM and sales funnel perspective?

• Are the unit economics sensible in the long run?

• What does the customer traction look like?

• Is the market domestic or global?

• Will some other investor co-invest 5 years later for the next round?

Localisation is a separate beast in itself and requires sophisticated supply chain expertise.

If we devise metrics to account for “Founders / HQ retained in India”, and the various metrics listed above for the startups, the success trends that are best aligned for Indian startups will eventually appear.

As global tech supply chains realign, how can India leverage the RDI Fund to integrate into global innovation networks while still building sovereign capabilities—without slipping into protectionism or technology dependency?

The goal is simple: be global but stay independent.

India's real strength is its people and manufacturing skills. We have 1,900 research centres run by global companies like IBM, Qualcomm, and Airbus. That's not a weakness. That's leverage. Invite more of them. If Microsoft wants to build quantum labs in India, great! They bring money, talent, and connections. But India keeps ownership of the breakthroughs that happen here.

For the critical stuff, India has to build it alone. Chips for defence, quantum codes that cannot be cracked, rockets, and artificial intelligence for military use. China showed that controlling rare earth metals is a weapon. We cannot be dependent on anyone for technology that subverts national security.

For everything else, we should collaborate globally. India graduates 800,000 engineers a year, many of whom work globally with a deep respect for IP. That makes us a trusted partner, not a locked-in victim.

The Fund can allow Indian startups to raise money from global investors and let foreign venture capitalists invest in Indian funds. That creates real competition for capital. But protect the core: critical technology intellectual property stays in India or is jointly owned.