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.