Explained: What’s behind India’s ₹1 lakh crore bet on energy R&D — and who will benefit?

New Delhi: The Union Cabinet on July 1 approved the Research Development and Innovation (RDI) Scheme with a total outlay of ₹1 lakh crore. The scheme is aimed at providing long-term financing or refinancing to private companies at low or nil interest rates, primarily in strategic and sunrise sectors.The scheme is designed to address persistent funding constraints in India’s research and development ecosystem and to encourage private sector-led innovation, especially in sectors critical to energy transition, decarbonisation, and domestic technology development. Officials said the scheme also seeks to provide growth and risk capital to help commercialise emerging technologies.The RDI Scheme will be operationalised through a two-tier funding structure. A Special Purpose Fund (SPF) will be set up within the Anusandhan National Research Foundation (ANRF). This corpus will be allocated to second-level fund managers, who will deploy the capital through concessional loans or equity-based support, particularly for startupsThe Governing Board of ANRF, chaired by the Prime Minister, will define the strategic direction. The Executive Council of ANRF will finalise guidelines, select fund managers, and approve projects. An Empowered Group of Secretaries headed by the Cabinet Secretary will oversee implementation. The Department of Science and Technology will be the nodal ministry.Ashwin Jacob, Partner and Energy, Resources & Industrial Industry Leader, Deloitte India, said: “The recent approval by Union Cabinet of the Rs 1 lakh crore Research, Development and Innovation (RDI) scheme is both timely and highly significant. The scheme comes at a critical juncture as India accelerates its energy transition aiming for ambitious targets such as 500 GW of non-fossil fuel capacity by 2030 and net-zero emissions by 2070. The scheme is designed to address persistent funding gaps, especially for private sector led R&D in sunrise & strategic sectors by providing long term, low or nil interest loans.”According to Jacob, the RDI scheme is expected to catalyse private investment, promote deep technological innovation and enhance global competitiveness in energy technologies.Vineet Mittal, Chairman, Avaada Group, called the move “a bold, timely, and visionary step”. He said: “It sends a strong signal that India is serious about becoming not just a consumer but also a creator of cutting-edge energy solutions. For decades, underinvestment in R&D has held back Indian industry, particularly in sectors like clean energy and emerging fuels like green hydrogen. This initiative recognises that innovation is the foundation of energy security, self-reliance and global competitiveness.”India’s total R&D expenditure is under 1 per cent of GDP. In the energy sector, public and private investment in R&D has remained limited due to lack of patient capital and long gestation timelines. Jacob noted that the ₹1 lakh crore allocation—equivalent to around $12 billion over five years—is a major step up from historical levels and, if deployed efficiently, could address key R&D gaps.Padam Prakash, Partner – Climate and Energy, PwC India, said: “The scheme’s focus on providing long-term, low or nil-interest financing to the private sector is a game-changer. Energy innovation often requires substantial upfront investment and long gestation periods, which private entities in India have historically hesitated to fund due to financial constraints and risk aversion.”Globally, countries like the US and China spend significantly more on energy R&D. According to Prakash, India’s gross expenditure on R&D is approximately 0.65-0.7 per cent of GDP, whereas the US spends around 3.5 per cent and China 2.4 per cent. Within India’s R&D spending, energy gets less than 10 per cent. Jacob said that while the proposed ₹1 lakh crore corpus is substantial, sustained and increasing investment will be needed to keep pace with rapid technological shifts globally.Vineet Mittal added: “The ₹1 lakh crore allocation is an excellent start… but it should be seen as a floor, not a ceiling. Global clean energy R&D spending by governments and corporations exceeds $50–70 billion annually. India’s ambition to lead the global energy transition will require sustained and growing investment in R&D.”Jacob said that in renewable energy, R&D is required for technologies related to grid integration and smart grids, advanced battery chemistries, recycling of batteries, green hydrogen production and storage, high-efficiency solar PV, offshore wind, and bioenergy. In oil and gas, key areas include carbon capture and storage, renewable fuels for aviation, and digitalisation of upstream to downstream operations.Mittal said: “In renewable energy, the following areas are critical: advanced solar technologies (perovskites, bifacial, topcon, tandem cells), cost-effective and scalable energy storage solutions, including solid-state batteries and flow batteries, green hydrogen production (improved electrolyser efficiency and lower capex), smart grids and demand-side management technologies.”“In oil & gas, innovation is needed in: carbon capture, utilisation and storage, alternative fuels such as biofuels and e-fuels, digitalisation, AI-driven optimisation, and methane emissions reduction across the value chain.”Prakash said that R&D is needed in perovskite and tandem solar cells, sodium-ion and solid-state batteries, electrolyser efficiency, low wind-speed and offshore wind turbines, carbon capture, IGCC coal gasification, enhanced oil recovery, LNG infrastructure, and bio-based fuels.The experts agree that the RDI Scheme addresses a gap in India’s innovation ecosystem but requires careful execution to be effective. Jacob noted that global benchmarking shows higher annual investments. Prakash said that while the scheme is “a significant step”, broader sectoral R&D needs may exceed the current allocation, especially given that the scheme is also expected to support sectors like AI and biotech.Mittal said: “The real value of this scheme lies in its catalytic potential—to unlock more private capital, foster industry-academia collaboration, and build domestic capability in critical technologies.”India has committed to installing 500 GW of non-fossil fuel capacity by 2030 and achieving net-zero emissions by 2070. This requires scaling up renewables, building green hydrogen ecosystems, improving grid resilience, and reducing reliance on imported technologies.Sudhir Pathak, Head- Central Design & Engg (CDE), Green Hydrogen Tech, Hero Future Energies, said: “This couldn’t have come at a more opportune time when India is pushing its net zero ambitions aggressively. History is testimony that all developed economies have deep-rooted orientation towards invention/innovation. The RDI scheme signals a bold commitment to building India’s intellectual capital.”Pathak said the scheme will help transition from a manufacturing-oriented economy to one based on invention and innovation. “It sets the stage for a renewed push toward high-impact research, innovation and all-round transformative technologies to bolster growth innovation across sectors including key driver—the energy sector.”He said the time is right to reimagine India’s R&D ambition across battery tech, grid architecture, next-gen solar PV, end-to-end hydrogen technologies, and AI leadership, along with domestic manufacturing.The operational guidelines for the scheme, identification of fund managers, and sector-specific allocations are expected to be finalised in the coming months. The focus will be on creating a pipeline of investable R&D projects that can scale. The Deep-Tech Fund of Funds to be created under the scheme will also play a role in supporting technology ventures beyond the energy sector.

As implementation begins, stakeholders are watching how effectively the ₹1 lakh crore corpus will be deployed, how sectors will be prioritised, and whether the intended innovation outcomes will be realised.