India’s ambitious ₹1 Lakh Cr Research, Development and Innovation (RDI) Fund aimed at boosting deeptech startups is embroiled in controversy after its first allocation sparked allegations of opaque selection and conflicts of interest involving panel members and beneficiary startups.
- First RDI fund allocation raised conflict of interest concerns
- Startups with ties to panelists received majority of funds
- Calls grow for independent review and transparent processes
What happened
India’s ₹1 Lakh Cr RDI Fund, designed to provide patient capital to deeptech startups, released its first tranche of funding, distributing ₹2,192 Cr across 22 companies. However, a report revealed that 15 of these startups had direct investment connections with seven members of the selection panel. Notable firms like Ather, Agnikul, and Dhruva Space were among the beneficiaries, collectively receiving ₹1,377 Cr. This has triggered allegations of potential conflict of interest and raised questions about the fairness of the allocation process.
Why it matters
The controversy highlights a critical challenge for India’s deeptech ecosystem: balancing the involvement of experienced industry insiders in government programs while maintaining transparent and impartial allocation of public funds. If perceived conflicts of interest are not adequately managed, it could erode trust in this major initiative intended to accelerate innovation and technology development in the country.
Additionally, emerging fund managers have expressed concern regarding the fund-of-funds scheme under the RDI Fund. While guidelines permit newer Alternative Investment Funds (AIFs) to participate, the initial cohort appears skewed toward seasoned managers with strong fundraising capabilities and extensive networks, reinforcing existing capital hierarchies rather than supporting emerging players.
What to watch next
The future credibility of the RDI Fund depends on how transparently and equitably subsequent funding rounds are conducted. Stakeholders are watching for clearer disclosures of panel members’ conflicts of interest, rigorous evaluation criteria, and open communication around allocation decisions. Independent reviews or oversight mechanisms may be crucial in rebuilding confidence among startups and investors alike.
Equally important will be the fund’s ability to foster a diverse deeptech ecosystem by supporting new fund managers and early-stage ventures rather than concentrating resources among established players. With ₹1 Lakh Cr on the line, the RDI Fund’s ongoing management will significantly influence India’s trajectory as a hub for pioneering technology innovation.