Budget 2026-27 has provided ₹20,000 crore under the ‘capital’ head to the Research, Development and Innovation (RDI) scheme, whereby a ₹1 lakh crore corpus is being put together for a ‘deep-tech fund of funds’, raising hopes for the operationalisation of the scheme in 2026-27.

Last year’s budget, too, had provided ₹20,000 crore. But, going by the revised estimates for 2025-26, it appears that only ₹3,000 crore was actually put in the corpus. And now, another ₹20,000 crore has been given — which is actually the bulk of the ₹28,049 crore the finance ministry allocated to the Department of Science and Technology.

From the statement of implementation of last year’s budget proposals, it is seen there was delay in setting up the fund of funds. The RDI scheme was announced by Prime Minister Narendra Modi in January 2025; the Cabinet approved it on July 1, but it was not until October 11 that the rules and governance structure were “concurred” to by the Department of Expenditure, Ministry of Finance.

The large corpus of ₹1 lakh crore indicates the government attaches much importance to it. The RDI scheme “aims to catalyse private sector participation in high-impact R&D”, according to a press release from the Department of Science and Technology. From the corpus, the scheme will provide long-term loans at “low or nil” interest rates, make equity infusions into startups and contribute to deep-tech fund of funds; it will not, however, provide grants or short-term loans.

Growing need

India has a clutch of funds dedicated to deep-tech, such as Speciale Invest, pi Ventures, YourNest Venture Capital, seafund, Capital A, Blume Ventures and IIMA Ventures. These funds raised over a billion dollars last year, more than twice raised in the year before.

The government is now appointing ‘second-level fund managers’ (SLFM) to manage the fund of funds. An SLFM is an intermediary investment manager that receives capital from a government-anchored fund of funds and deploys it in startups, venture funds, or projects.

The first level is the setting up of the ‘special purpose fund’, under the Anusandhan National Research Foundation.

Recently, Dr Abhay Karandikar, Secretary, Department of Science and Technology, said in a LinkedIn post that there had been “an overwhelming response” to the government’s call for applications for SLFMs from AIFs, FoFs, DFIs and NBFCs. “We are expected to complete the process of appointing fund of funds, AIF, DFI, NBFC and FRO by April-May,” Karandikar said.

Two government bodies had already been appointed “on nomination basis” as SLFM — the Technology Development Board; and the Biotechnology Industry Research Assistance Council (BIRAC). The former had also “initiated the process of inviting applications from corporates and startups”, Karandikar said.

“The two-tier fund structure and onboarding of experienced institutions like TDB and BIRAC are particularly reassuring,” says Girij Pal Singh, Co-founder and Director, Athena Generics, IIT-Kanpur.

Karandikar said the RDI was a key milestone in India’s efforts to finance high-risk, high-impact technologies and strengthen the innovation pipeline.

“The nature of financing includes low-interest, long-tenor debt, equity or optionally convertible debt on attractive and flexible terms,” he said.

NQM up, NSM down

The budget has allocated slightly more to the National Quantum Mission, for its revenue expenditure. This is apparently because the mission had overspent last year’s allocation — ₹755 crore (revised estimate), against ₹600 crore given under Budget 2025-26. Accordingly, the allocation has been raised to ₹900 crore for 2026-27. Conversely, the National Supercomputing Mission has received a negligible ₹1 lakh, against last year’s allocation of ₹265 crore — again because the mission ended up spending twice as much (₹530 crore).

Big boost

The government-owned semiconductor lab at Mohali, Punjab, has got a bonanza — ₹900 crore, against ₹400 crore last year (budget estimate) and ₹20 crore (revised estimate). This is part of the total allocation of ₹8,000 crore for the ‘modified programme for the development of semiconductors and display manufacturing ecosystem in India’, compared with ₹7,000 crore (budget 2025-26) and ₹4,300 crore (revised 2025-26). Various schemes under the programme have been given higher allocations.

The India Semiconductor Mission 2.0 has got ₹1,000 crore, against nil last year.

The budget has slashed the allocation under the head ‘Production-linked incentive for large-scale electronics manufacturing’ to ₹1,345 crore, against ₹8,885 crore (budget 2025-26) and ₹6,690 crore (revised 2025-26). On the other hand, the electronic components manufacturing scheme has received a big boost of ₹1,500 crore, against ₹6.8 crore previously.

More Like This

Published on February 9, 2026