India’s $12B RDI Fund to Revolutionize Electronics and Tech Sectors

The Union Cabinet has approved a $12 billion scheme to support research, development, and innovation (RDI) in India’s technology and electronics sectors. This move comes after decades of industry demands for promoting electronics design in India, rather than just assembling consumer devices.

The scheme, with a net outlay of $12 billion (₹1 trillion) spread over multiple years, will operate under the Anusandhan National Research Foundation (ANRF) of the Department of Science and Technology. Through a ‘special purpose fund’ within ANRF, the Centre will appoint an investment committee managed by ANRF’s executive council. A group of secretaries under the Cabinet secretary will oversee the allocation of funds and appoint fund managers for this task.

Eligible companies for RDI grants include those working on green energy solutions, biotechnology device manufacturers, pharmaceuticals and medical devices, artificial intelligence solutions, and devices catering to agriculture, health, and education. The scheme also supports digital economy stakeholders such as financial services, deeptech applications like quantum computing, robotics, and space technologies, as well as strategic technologies for national security and public utilities.

India’s technology ecosystem primarily operates on secondary layers of applications and innovations. Although India builds applications in AI, robotics, and other sectors, they are mostly built on foundational, patented technologies developed by companies in the US, China, Japan, Korea, and the European Union. This leaves India at risk of economic sanctions in case of a conflict with other nations, as seen in the 2020 Galwan Valley skirmish with China, where a mass-scale cyber-attack took down Maharashtra’s power grid.

New Delhi aims to change this by replacing technology and telecommunications infrastructure supplied by Chinese tech companies with locally developed ones. Building core patents requires significant investments in RDI initiatives. However, India's median RDI investment in the private sector is only 0.6%, compared to 5% in China and Japan and Google’s 15% of quarterly revenue.

While companies like Dixon Technologies, Bhagwati Products, Kaynes Technology, Amber, and Bharat Foxconn International Holdings are assembling electronic devices in India, none of this involves the development of patented foundational technologies. India’s first chip fabrication plant by Tata Electronics is expected to produce its first demonstrator chip by the end of next year, with Kaynes, HCL, and US-based Micron creating chip-testing facilities in India.

These core electronics designs power all consumer devices and critical networking hardware. In case of a conflict, India could face the risk of not being able to build critical infrastructure. The RDI scheme seeks to help private companies and research institutes build such patents and develop India’s own technology infrastructure.

Building patents requires years of investment and creating unique technology. The US and China not only own patents but also build technologies at scale, allowing them to sell chips and hardware at low costs. For India, building this scale will take time. The goal, as detailed by the ministry of telecommunications, is to replace tech infrastructure sourced from other countries with an indigenous stack.

While India’s technologies will eventually comply with global tech infrastructure, the RDI scheme aims to make significant strides in indigenization. This initiative could potentially make a major difference in India’s technology landscape and reduce dependency on foreign tech.