Interim Budget 2024: FM Announces INR 1 Lakh Cr Corpus To Fuel R&D In Sunrise Sectors

Finance Minister Nirmala Sitharaman on Thursday announced that a corpus of INR 1 Lakh Cr will be established to spur research and development in the country in the sunrise sectors.

The corpus will provide long-term financing with ‘low or nil’ interest rates to fuel private sector research and development (R&D) in the sunrise sectors, the FM said in her interim Budget speech.

“For our tech-savvy youth, this will be a golden era. A corpus of INR 1 Lakh Cr will be established with a 50-year interest-free loan. The corpus will provide long-term financing or refinancing with long tenures at low or nil interest rates. This will help the private sector to scale up research in sunrise domains,” Sitharaman said.

She added that there was a need for building programmes that combine the powers of Indian youth and technology. 

It is pertinent to note that this was the interim Budget and a full budget will be presented post general elections slated later this year.

What’s In Store?

While there is no clarity yet on the contours of this new corpus, the funds will go directly towards strengthening the research ecosystem in the country. The move will likely benefit startups, especially in areas such as spacetech, artificial intelligence, deeptech, and semiconductors.

It will also address the demands of the ecosystem for long-tenure loans as research is a time-intensive process and the journey from an initial prototype to the final product takes years. The credit rollout will enable homegrown players to focus on building indigenous technologies with global applications and give a much-needed push to the homegrown startup ecosystem.

The new corpus will also fuel R&D in capital-intensive and research-centric fields such as deeptech, which have seen a resurgence in the recent past. The move is also in line with the Centre’s plans to turn India into a research hub, which is expected to directly help budding startups in these emerging domains.

In the interim Budget, the FM also unveiled a new scheme to strengthen the deployment of deeptech technologies for defence purposes and accelerating self-reliance. 

Interestingly, various arms of the government have announced a slew of incentives and initiatives for startups in the recent past to remote R&D in their respective sectors. 

Just last month, the Union government sought proposals from research organisations and other stakeholders to build indigenously developed “tools and frameworks” that advocate for fair and ethical advancement of AI. 

In November last year, the Ministry of Mines invited proposals from startups for building prototypes in the mining, mineral processing, metallurgy, and recycling sectors. The initiative offered funding for projects up to two years in duration. 

Prior to that, an expert panel also urged the Ministry of Electronics and Information Technology (MeitY) to establish a semiconductor research centre at an initial outlay of $8 Bn over the next five years. 

While India’s R&D expenditure is reportedly among the highest globally, the ecosystem continues to be plagued by issues such as a lack of talent, high-quality research, adequate infrastructure and red tape. 

While the government aims to address these challenges by envisaging this mega INR 1 Lakh Cr fund, it remains to be seen how Indian startups leverage this opportunity and further fuel R&D in the country.

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