Better late than never — a sentiment blazing across the Indian deeptech ecosystem — and at the centre of the cacophony lies the much-hailed INR 1 Lakh Cr corpus announced by the finance minister in the Union Budget 2024 to fuel research and development in sunrise sectors.

More than a year and hordes of missed memos later, the fund has finally managed to receive approval from the Union cabinet under the Centre’s Research Development and Innovation (RDI) scheme earlier this month.

With this, the deeptech ecosystem has breathed a sigh of relief, at least from the looks of it. However, behind closed doors, VCs and startups are famished for clarity.

How will the allocation take place? What guidelines will the Centre introduce? How much funding will be disbursed to sub-sectors and how? The stakeholders are groping in the dark.

Amid the haze of grandstanding, the government also approved a second tranche of INR 10,000 Cr deeptech fund allocation earlier this month. On top of it, the Centre is planning another INR 2,000 Cr initiative for drone tech.

Together, these announcements, stakeholders say, are a little more than an eyewash and just enough to keep the flame of hope flickering until the target sectors are benefited in real time with real funds in hand.

While that may take some time to realise, let’s understand how these allocations will tweak the script for India’s deeptech fairy story.

Making Sense Of The INR 1 Lakh Cr RDI Scheme

The major stumbling block for India’s deeptech sector is hardware innovation. Whether it is small electronics parts or something as complex as making a satellite, the Indian manufacturing arena is marred by sky-high capex, tech incompetencies and other production-related risks.

Besides, deep research for anything novel is time-consuming, and hardly anyone wants to walk that road.

That’s not all, VCs often fight shy of making deeptech bets (think IP-led or R&D-heavy ventures) due to reasons like short fund lifecycles, exit pressures, and limited cheque sizes.

This is exactly where the government’s backing can tip the scales.

Now, as far as the government’s RDI scheme is concerned, the idea is to ease funding constraints for the private sector, including startups. However, the irony of the matter is that nobody knows how exactly the new scheme will augment R&D in deeptech.

On the other hand, the government’s pitch is that it will........

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