The government’s ₹1 Lakh Crore Research, Development and Innovation (RDI) fund was launched to boost India’s deeptech sector but its first tranche awarding ₹2,192 Cr to startups has raised questions about conflicts of interest and transparency in the selection process.
- ₹2,192 Cr allocated to 22 startups in first RDI fund round
- 15 funded ventures linked to 7 of 12-member investment committee
- Calls grow for independent oversight and transparent application process
What happened
India’s ambitious ₹1 Lakh Crore RDI fund, aimed at accelerating innovation in deeptech domains like AI, space, semiconductors, and biotech, recently distributed ₹2,192 Crore to 22 startups. A report revealed that 15 of these beneficiaries had investment connections with seven members of the 12-person investment committee managing the fund. IC members disclosed these relationships and recused themselves as required.
Despite government assurances of merit-based selections and adherence to conflict-of-interest guidelines, the situation has sparked debate about the adequacy of current governance mechanisms. Concerns arose after some ecosystem stakeholders highlighted a lack of transparency during application phases and the potential for preferential treatment of companies with strong insider networks.
Why it matters
The RDI fund is a critical source of patient capital designed to support India’s emerging deeptech startups that often struggle to secure funding due to long development cycles and high technology readiness levels. If governance gaps allow a concentration of funding among well-connected incumbents, it could stifle innovation and undermine the fund’s intent to foster a diverse and competitive ecosystem.
Transparency and independent oversight are essential to maintain trust in public funding initiatives. This controversy highlights how undisclosed biases or inadequate checks can create perceptions of favoritism, deterring newer entrepreneurs who lack ecosystem access and further entrenching existing power dynamics within the deeptech space.
What to watch next
Stakeholders will be closely monitoring if the government introduces reforms to enhance transparency in fund management and ensures stricter conflict-of-interest policies. There is growing demand for an independent supervisory body or external audit mechanisms to oversee fund allocations and guarantee a level playing field for applicants.
The trajectory of subsequent RDI fund rounds will reveal whether lessons from the first allocation are integrated. Improvements in public communication about application windows and criteria, alongside more open evaluation procedures, could broaden fund access and better align distribution with the scheme’s strategic goals of nurturing innovation across India’s deeptech sector.