The Indian government has implemented a significant Research, Development and Innovation (RDI) Scheme, backed by a substantial fund of Rs 1 lakh crore. The goal of this project is to guarantee that Indian companies, particularly MSMEs, have the necessary resources for research and development. It is viewed as a crucial step that could lead to a new phase of industrial innovation, making research a common aspect of India’s economic landscape instead of a rare occurrence.
The scheme is anticipated to greatly enhance industrial research by allowing small and medium enterprises to engage in meaningful innovation. The Anusandhan National Research Foundation (ANRF) will oversee it, and its goal is to advance collaboration with the private sector while expanding India’s industrial R&D presence. However, experts warn that the true challenge will be in the execution of the plan, especially considering the financial limitations, narrow profit margins, and limited technical skills of many MSMEs.
Promise vs Practical Challenges
MSMEs are vital to the Indian economy, contributing nearly 30% to the GDP and almost half of the country’s exports. However, less than 1% of these enterprises engage in formal research and development (R&D) activities. The RDI Scheme aims to resolve this issue by combining public funding with private innovation. Vineeta Hariharan, who leads Public Policy Strategy at Deloitte India, points out that just providing financial support is not enough to bring about change. She emphasizes that MSMEs also need
strong infrastructure and supportive environments to turn their ideas into market-ready projects.
Hariharan also discusses the significance of “translational R&D,” which involves turning lab innovations into practical industrial uses. Many MSMEs do not have the facilities needed to test, validate, and commercialize new ideas. She suggests that shared laboratories, technology missions, and specialized R&D hubs could significantly impact emerging fields like green materials, biotech products, and electric vehicle component manufacturing.
Funding Architecture and Operational Hurdles
The RDI Scheme uses a two-tier funding model where the ANRF gives money to authorised fund managers, who then distribute it to eligible companies. While this setup aims for accountability, experts are concerned it might lead to administrative issues. The multiple screening steps could slow down approvals, hindering the innovation the scheme intends to promote.
Hariharan points out that fund managers might become cautious and prefer to support established companies over new innovators. She suggests a mixed approach—offering grants for early-stage proof-of-concept and loans or equity for scaling up—to balance speed and accountability. A fast-track approval system run by state innovation councils or technology parks could also assist smaller innovators in getting timely help.
Gaurav Bawa, WIKA India’s Senior Vice President, highlights the importance of financial clarity and simpler processes. While larger companies can manage complex guidelines, MSMEs need more predictable frameworks. He stresses that the ANRF Executive Council should provide clear guidance on selection and evaluation criteria so that MSMEs can confidently align their R&D plans.
Administrative Clarity: The Missing Piece
Operational simplicity will be crucial in determining whether the scheme achieves success or remains underutilized. Bawa emphasizes that micro, small, and medium enterprises (MSMEs) require a streamlined administrative framework overseen by the Department of Science and Technology (DST). Implementing transparent processes, simplifying applications, and establishing responsive communication channels will help prevent delays and enhance participation.
He also notes that larger companies typically have professional teams to manage proposals, while smaller firms often rely on consultants who may misinterpret the guidelines. In order to solve this problem, digital awareness campaigns, orientation programs, and outreach at the cluster level could be beneficial.
Conclusion: Transforming a Scheme into a National Movement
Experts from various sectors and policy domains concur that the RDI Scheme represents a significant advancement; however, its effectiveness hinges on the philosophy of its implementation. As noted by Hariharan, the initiative must transcend its role as merely a funding mechanism and evolve into a national innovation movement, fostering collaboration among scientists, students, and MSMEs to develop globally competitive solutions.
To further stimulate risk-taking among smaller enterprises, tax incentives for R&D expenditures, patent registrations, and successful Innovations might be very important. With India hosting 6.3 crore MSMEs, it is vital to incorporate these entities into a framework of innovation-driven growth. If executed with care, the RDI Scheme has the potential to catalyze a generational transformation—empowering MSMEs to become genuine innovation leaders and embedding industrial R&D into the fabric of India’s economic environment.
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