Full Text
REGD. No. D. L.-33004/99
The Gazette of India
CG-DL-E-03112025-267350
EXTRAORDINARY
PART II—Section 3—Sub-section (i)
PUBLISHED BY AUTHORITY
No. 723]
NEW DELHI, MONDAY, NOVEMBER 3, 2025/ KARTIKA 12, 1947
MINISTRY OF SCIENCE AND TECHNOLOGY
(Department of Science and Technolog)
NOTIFICATION
New Delhi, the 1st November, 2025
G.S.R. 809(E).—The following draft of special financial rules, which the Central Government
proposes to make in exercise of the powers conferred by section 13(4) of the Anusandhan National
Research Foundation Act, 2023, is hereby published for information of persons likely to be affected
thereby; and notice is hereby given that the said draft special financial rules shall be taken into
consideration after the expiry of a period of thirty days from the date on which the copies of this
notification as published in the Official Gazette, are made available to the public;
Objections and suggestions to these draft financial rules, if any, may be sent to Dr. Bhupendra Kumar
Sharma, Scientist D, Department of Science & Technology, Technology Bhawan, New Mehrauli Road,
New Delhi-110016 email: b.k.sharma83@gov.in
The objections or suggestions, if any, received from any person in respect of the said draft special financial
rules before the expiry of the aforesaid period of thirty days will be taken into consideration by the Central
Government.
Draft Special Financial
Rules for the
Research Development and Innovation Fund
Chapter 1: Preface
1. Government of India has decided to set up the Research, Development, and Innovation Fund
(RDIF) to spur private sector's efforts in research, development & innovation. For this
purpose, the Union Cabinet has approved Research, Development, and Innovation (RDI)
Scheme with an outlay of Rs One Lakh Crore over the period of six years. The scheme will
finance or refinance those proposals of the private sector, which are likely to have a
transformative and strong ripple impact on the economy and have potential for high growth
and commercial success.
2. Salient points of the RDI Scheme:
(i) Flow of Government Funds as interest free loan: A Special Purpose Fund (SPF) within
Anusandhan National Research Foundation (ANRF) will be set up as the corpus fund
(RDIF). ANRF to establish an independent business unit with a separate team that will
specifically manage the SPF for spurring private sector-driven research and innovation at
commercial scale, as distinct from the core functions of the ANRF.
(ii) The Independent Business Unit under the ANRF to act as the 1st level custodian of the
RDIF.
(iii) Selection of Second Level Fund Managers(s) (SLFMs), which will disburse funds to
the selected projects: The SLFMs will be selected with the approval of the Empowered
Group of Secretaries (EGoS) on the recommendation of the Executive Council of ANRF.
(iv) Types of Funding to SLFM: The funding to the SLFM would be mostly in the form of a
concessional loan/purchase of units in the case of Alternative Investment Funds. The
extent of concession may vary based on the sectors/projects covered by the SLFM.
(v) Special Financial Rules: The Special Financial Rules for the implementation of this
Scheme, in place of General Financial Rules (GFR) have been formulated by the
Department of Science & Technology in consultation with the Executive Council ANRF
and the same is finalized with the concurrence of the Department of Expenditure. Section
13(4) of the ANRF Act, 2023 allows framing of such rules which may be different from
the GFR.
(vi) Quantum of Financing: The scheme will finance not more than 50 per cent of the project
cost, and the balance is to be brought in by the proponent private entity by way of
commercial funding and own resources.
(vii) As a 'corpus fund' established at the 1st Custodian level, the proceeds on repayment or
exit proceeds from the private entities, will come back to that corpus fund to be used
again, instead of being credited back to the Consolidated Fund of India (CFI). The funds
will be returned only after 50
years. A key objective of the scheme is to enable and facilitate effective recycling of
capital to keep supporting R&D efforts by the private sector.
(viii) The contribution from the private sector at the corpus fund level is not envisaged.
However, the contribution may come in the fund promoted by the Deep Tech Fund of
Funds. At the project level, the contribution by the private sector should certainly be at
least 50 per cent.
(ix) The fund flow from CFI to the RDIF shall be based on half-yearly net requirement of
funds for disbursement to the SLFM.
(x) The proceeds on repayment or exit proceeds from the private entities will come to RDIF
through SLFM.
(xi) The Special Financial Rules have been formulated for facilitating effective deployment
and usage of RDIF, budgeting and accounting arrangements, and recycling of the returns,
for proper implementation of the RDI Scheme in a smooth and non-overly prescriptive
manner.
(xii) The Rules are framed based on the following definitive documents viz.,
a. Investment Thesis of RDIF (attached in Appendix 1)
b. Financing Framework for RDIF to fund SLFMs (attached in Appendix 2)
C. Selection of SLFMs (attached in Appendix 3)
Chapter 2: Introduction
Rule 1 Short Title & Commencement. These rules may be called "Special Financial Rule 2025 for
RDIF" and it shall come into effect from the date of notification by DST under Section 13(4) of
ANRF Act 2023.
Rule 2 Applicability. Applications of these rules are restricted to the financial transaction/governance
related to Special Purpose Fund (RDIF) only, established under Section 13(2)(d) of ANRF Act 2023.
Rule 3 Definition. In these rules, unless the context otherwise requires-
(i) Anusandhan National Research Foundation (ANRF): means the Foundation
established through the Anusandhan National Research Foundation Act, 2023.
(ii) Alternative Investment Funds: means Alternative Investment Funds, as defined in
Section 2 (1) (b) of Securities and Exchange Board of India (Alternative Investment
Fund) Regulations, 2012.
(iii) Carried Interest: means a percentage of profit generated from investments, and is a reward
for the fund manager for maximising the return for investors in the Alternative Investment
Fund.
(iv) Consolidated Fund of India (CFI): means the Consolidated Fund of India, as under
Article 266(1) of the Constitution of India.
(v) Financial Year: means the year beginning on the 1st of April and ending on 31st of March
of the following year.
(vi) Eligible Technology Entities: means any legal entity which is engaged in developing
RDI-intensive technology (TRL4 and above). These could include companies registered
the Companies Act 2013, partnerships registered under the Indian Partnership Act, 1932,
and limited liability partnerships registered under the Limited Liability Partnership Act,
2008, engaged in scale-up of RDI-intensive technologies beyond Technology Readiness
Level 4. These shall include startups as defined in the Department for Promotion of
Industry and Internal Trade Notification G.S.R. 127(E) dated 19 February 2019, as may be
modified from time to time.
(vii) Empowered Group of Secretaries (EGoS): means an Apex Level Committee of RDIF
comprising of Cabinet Secretary as the Chair, Principal Scientific Advisor to the
Government of India, Secretaries to the Government of India in the Department of
Economic Affairs, Department of Promotion of Industry and Internal Trade, Department
of Science and Technology, and other co-opted members depending on subjects/ sectors/
projects involved.
(viii) Executive Council (EC): means the Council constituted under Sub-section 1 of Section 7
of the Anusandhan National Research Foundation Act, 2003.
(ix) Executive Director RDIF (ED RDIF): Executive Director of RDIF, appointed by the
Executive Council of ANRF, and to be responsible for the overall management
of the RDIF
(x) Expert Advisory Committee: means a committee constituted by the Executive Council
under Sub-section 1 of Section 12 of the Anusandhan National Research Foundation Act,
2023, comprising of an eminent industry leader drawn from technology, industry,
investment, and/ or R&D sectors as the Chair; three to four experts drawn from industry,
investment, and/or technology R&D sectors, and Executive Director as the Member
Secretary of the Committee.
(xi) Fund of Funds: means Alternative Investment Funds which themselves invest in units of
other AIFs as per the Securities and Exchange Board of India (Alternative Investment
Fund) Regulations, 2012. Such an AIF would be referred to as a Fund of Funds. In such
cases, these Funds of Funds shall ensure that any daughter AIFs to which it contributes
RDIF funds (a) shall not themselves invest RDIF funds in units of other AIFs (b) shall
themselves comply with all the provisions specified for, and be treated as, SLFMs.
(xii) Intellectual Property Rights: means rights pertaining to patents, trademarks, registered
designs, copyrights and layout design of integrated circuits, and all other property rights
protected by The Patents Act, 1970, as amended by the Patents (Amendment) Acts of
1999, 2002, and 2005; and other statutes and acts relevant to these rights.
(xiii) Investment Committee (IC): means a committee set up by SLFMs, for assessing and
vetting investment proposals presented by the Fund Management Team, and taking
investment decisions.
(xiv) Management Fee: means fees chargeable to the Alternative Investment Fund, as per the
Investment Management Agreement between the fund and the fund manager. This fee is
paid to the fund manager, which is usually specified as a percentage of the capital
committed during the commitment period. Thereafter, it reduces to a fixed percentage of
the actual invested capital, if it is lesser than the committed capital, or as a percentage of
the underlying value of the assets under management (AUM) of the fund.
(xv) Net Interest Margin: means the difference between the interest rate at which any Second
Level Fund Manager lends capital to Eligible Technology Entities, and that at which the
said Second Level Fund Manager receives funding from RDIF.
(xvi) Quality and Cost Based Selection (QCBS): means a selection process as defined in
Rule 52 of Special Financial Rules of RDIF.
(xvii) Research Development & Innovation Fund (RDIF): means a Special Purpose Fund of
ANRF established as an Independent Business Unit under Clause (d) of Sub-Section (2) of
Section 13 of the Anusandhan National Research Foundation Act, 2023 with a purpose to
spur private sector's efforts in Research, Development, and Innovation.
(xviii) RDIF Professionals and Employees: means the personnel as defined in the RDIF
Governance Structure and Management Team document as approved by the EC.
(xix) Second Level Fund Managers: means Alternative Investment Funds, Development
Finance Institutions, Non-banking Finance Corporations, and
Focused Research Organisations which are selected to receive funds under the Research
Development and Innovation Scheme to invest in Eligible Technology Entities the form
of equity, debt, or a combination of both.
(xx) Treasury Single Account: means Treasury Single Account system as outlined in OM
No. 3/ (06)/PFMS/2023 dated 21st May, 2024.
Rule 4 Removal of Doubts. Where doubt arises as to the interpretation of any of the provisions of
these Rules, the matter shall be referred to the Department of Science & Technology (DST) for
decision.
Rule 5 Modifications.
(i) The systems and procedures established by these Rules are subject to general or special
instructions/ orders, which the DST may issue from time to time;
(ii) The systems and procedures established by these Rules may be modified by DST only
with the concurrence of the Department of Expenditure/Ministry of Finance.
Chapter 3: General Rules
Rule 6 Notwithstanding anything stated under the General Financial Rules, 2017 (hereafter referred to
as GFR) the financial transaction/governance related to this Special Purpose Fund (RDIF) shall be
governed by these Special Financial Rules (hereafter referred to as SFR).
Rule 7 Any matter unless otherwise specifically addressed in this SFR, the provisions of GFR shall
apply till such time such provisions are made, amended and included in the SFR following the due
process as provided for in Rule 5.
Rule 8 It is the duty of the RDIF professionals and employees concerned to ensure that the receipts
and dues of the RDIF are correctly and promptly assessed, collected and duly credited to the RDIF
account.
Rule 9 Amounts due to RDIF shall not be left outstanding without sufficient reasons. Where such
amounts appear to be irrecoverable, the approval of the EC shall be obtained for their adjustment.
Rule 10 Standards of financial propriety. Every professional and employee of RDIF incurring or
authorizing expenditure from RDIF should be guided by high standards of financial propriety. Every
professional and employee should also enforce financial order and strict economy and see that all
relevant financial rules and regulations are observed, by his own office and by subordinate disbursing
professionals and employees. Among the principles on which emphasis is generally laid are the
following:
(i) Every professional and employee is expected to exercise the same vigilance in respect of
expenditure incurred from RDIF money as a person of ordinary prudence would exercise
in respect of expenditure of his own money.
(ii) The expenditure should not be prima facie more than the occasion demands.
(iii) No authority should exercise its powers of sanctioning expenditure to pass an order which
will be directly or indirectly to its own advantage.
(iv) Expenditure from RDIF moneys should not be incurred for the benefit of a particular
person or a section of the people, unless
a. a claim for the amount could be enforced in a Court of Law, or
b. the expenditure is in pursuance of a recognized policy or custom. [GFR Rule 21]
Rule 11 Intellectual Property Rights. In all cases, ownership of the physical and intellectual assets
created or acquired out of funds provided by the RDIF shall vest with Eligible Technology Entities.
Rule 12 Hiring of Full-time RDIF professionals and employees. RDIF may select and hire
competent and meritorious professionals and employees from the market at
appropriate remuneration levels subject to the maximum compensation as approved by the competent
authority for the positions created under RDIF.
Rule 13 Part-time Hiring. RDIF may hire part-time consultants/experts/agencies from the market at
appropriate compensation rates.
Chapter 4: Rules Related to Fund Flow
Part 4A: From CFI to RDIF
Rule 14 The flow of funds from RDIF to SLFM shall be done in "Just-In-Time" manner in the
Treasury Single Account (TSA) system¹. For this purpose, the ANRF shall open an account in Reserve
Bank of India (RBI) for RDIF.
Rule 15 RDIF shall open an account in any Scheduled Commercial Bank to receive fund returned by
SLFMs, which includes principal/ interest repaid, exit proceeds, and other receipts etc.
Rule 16 The fund flow from CFI to RDIF shall be provided based on half-yearly net requirements of
funds for disbursement to SLFMs.
Rule 17 DST will issue authorization to ANRF for RDIF based on half-yearly net fund requirement.
Based on the authorisation issued by DST, fund shall be drawn in “Just- In-Time" manner by RDIF.
Rule 18 Operational Expenditure of RDIF. Direct budgetary support will be provided to meet
operational expenditure (salary and administrative expenditure, etc) of RDIF. DST will create a
separate budget line in its budget. Once RDIF starts getting returns from SLFMs and starts breaking
even, the direct budgetary support will be stopped, as it is expected that RDIF will become self-
sustaining with respect to operational expenses.
Rule 19 RDIF shall have the freedom to invest the surplus fund, if any, in a deposit instrument, other
than that mentioned in Rule 18, in any scheduled commercial bank, at market driven highest interest
rate using a transparent bidding method.
Rule 20 RDIF shall have to return the entire fund to the CFI only after 50 years, without any interest.
The year means Financial Year.
Rule 21 RDIF shall recycle the capital received from SLFMs to keep supporting research,
development, and innovation efforts by the private sector.
Rule 22 The Financial Year will be taken into consideration to calculate 50 years for the purpose of
return. The money received in the respective Financial Year by RDIF is to be returned to CFI at the
closure of the corresponding 50th Financial Year.
[Note: For example, let us say Rs 10,000 crore is received in Financial Year 2025-26, Rs 20,000 crores
in Financial Year 2026-27, and so on. Then RDIF shall have to return
¹ Ref: OM is No. 3/ (06)/PFMS/2023 dated 21st May, 2024.
Rs 10,000 crore in Financial Year 2075-76 (by 31st March 2076), Rs 20,000 crore in Financial Year
2076-77 (by 31st March 2077), and so on.]
Rule 23 RDIF to return the loan to CFI in a manner such that the entire amount of Rs One Lakh Crore
gets repatriated back to CFI in an efficient and timely manner after the time-period of 50 years in
accordance with Rule 22.
(i) In case, after return of Rs One Lakh Crore any surplus remains with RDIF, then the same
shall also be returned to CFI.
(ii) In case, there is any shortfall, then the same shall be written off following Rule 24.
Rule 24 Write off. In case there is a shortfall in returning the loan by RDIF to CFI after 50 years, its
write-off shall be done by the Government as per extant rules.
Part 4B: RDIF to SLFMS
Rule 25 Fund flow from RDIF to SLFMs shall be via:
(i) Alternate Investment Fund (AIF) mechanisms i.e., purchase of units in Schemes of AIF
Trusts via Contribution Agreements (including Fund of Funds); or
(ii) Loans, at low rates with extended tenors via Loan Agreements
Rule 26 RDIF to release funds to the SLFMs as per drawdown notice as mentioned in
Loan/Contribution Agreements.
Rule 27 RDIF shall stop new commitment/funding to SLFM from such time after assessing the
requirement of repatriating back the principal amount to CFI in accordance with Rule 22 and Rule 23.
Rule 28 SLFMs shall prepare fund requirement, in such form as may be decided/prescribed by the
RDIF, showing estimated receipts from the proceeds on repayment, or exit proceeds from the private
entities, and other sources, and forward the same to RDIF.
Rule 29 Upon receipt of such demand from SLFMs, RDIF to release the fund to the designated bank
account of the SLFM within a specified time frame (ref Rule 26).
Part 4B.I: Fund Flow from RDIF to SLFMs and vice versa in the AIFs mode
Rule 30 Funding Terms. RDIF shall allocate funds to AIFs through modes as prescribed in the
Financing Framework for RDIF to fund SLFMs (attached in Appendix 2).
Rule 31 Term Life. RDIF shall allocate funds to AIFs with term life as prescribed in the Financing
Framework for RDIF to fund SLFMs (attached in Appendix 2).
Rule 32 Limits to RDIF Financial Contribution. RDIF shall contribute to SLFM's aggregate capital
up to limits as prescribed in the Financing Framework for RDIF to fund SLFMs (attached in Appendix
2).
Rule 33 Management Fees. RDIF shall accept amounts charged as management fees by the SLFMs,
subject to maximum cap, as prescribed in the Financing Framework for RDIF to fund SLFMs
(attached in Appendix 2).
Rule 34 Carried Interest. RDIF shall accept amounts charged as carried interest by the SLFMs,
subject to maximum cap, as prescribed in the Financing Framework for RDIF to fund SLFMs
(attached in Appendix 2).
Rule 35 Returns. SLFMs shall return funds to RDIF according to Modes as prescribed in the Financing
Framework for RDIF to fund SLFMs (attached in Appendix 2). The Modes applied may vary from
one SLFM to another in line with the Financing Framework for RDIF to fund SLFMs (attached in
Appendix 2).
Part 4B.II: Fund Flow from RDIF to SLFMs and vice versa in the Loan financing mode
Rule 36 Interest Rates. RDIF shall allocate funds to SLFMs at such lower rates as prescribed in the
Financing Framework for RDIF to fund SLFMs (attached in Appendix 2). These rates may vary from
one SLFM to another.
Rule 37 Tenors. RDIF shall allocate funds to SLFMs over such extended tenors as prescribed in the
Financing Framework for RDIF to fund SLFMs (attached in Appendix 2). These tenors may vary from
one SLFM to another.
Rule 38 Management Fees. RDIF shall accept amounts charged as management fees by the SLFMs,
subject to maximum cap, as prescribed in the Financing Framework for RDIF to fund SLFMs
(attached in Appendix 2)
Rule 39 Lock-in Period. RDIF shall provide SLFMs with a minimum lock-in period on principal and
interest payments as may be decided by RDIF following the Financing Framework for RDIF to fund
SLFMs (attached in Appendix 2). SLFM shall pay back both principal and interest after the lock-in
period as per the terms and conditions of the loan agreement.
Rule 40 Investment Limit of RDIF. RDIF contributions in the loan mode to any SLFM shall be
subject to a maximum limit as prescribed in the Financing Framework for RDIF to fund SLFMs
(attached in Appendix 2).
Chapter 5: Rules Related to Budget & Accounting
Part 5A: Rules Related to Budget
Rule 41 Financial Year. Financial Year of the RDIF shall commence on the 1st day of April of each
year and end on the 31st day of March of the following year.
Rule 42 The RDIF shall have to prepare its annual budget and that shall contain the following:
(i) Estimates of all receipts, from SLFMs, interest income from short-term deposits, if any,
etc. expected to be generated during the financial year to which the budget relates;
(ii) Estimates of all expenditure to be incurred (disbursements to SLFMs), operational
expenditure for management of RDIF in the financial year, etc;
(iii) Any other information as may be prescribed.
Rule 43 RDIF shall present its annual budget to DST after getting it approved from the EC at a time and
format as may be prescribed by DST in consultation with RDIF.
Rule 44 Duties and Responsibilities of ED RDIF. The ED RDIF shall:
(i) be responsible and accountable for financial management of RDIF;
(ii) ensure that the RDIF funds are used for the purpose for which they were meant;
(iii) be responsible for the effective, efficient, economical and transparent use of the resources
of the RDIF in achieving its stated objectives, whilst complying with performance
standards;
(iv) review and monitor regularly the performance of the RDIF to determine whether stated
objectives are achieved;
(v) be responsible for preparation of expenditure and other statements relating to RDIF as
required by regulations, guidelines or directives issued by EC/ EGoS/DST;
(vi) shall ensure that RDIF maintains full and proper records of financial transactions and
adopts systems and procedures that shall at all times afford internal controls;
(vii) shall ensure that RDIF follows the procurement procedure for execution of works, as well
as for procurement of services and supplies, and implements it in a fair, equitable,
transparent, competitive and cost-effective manner. ED RDIF shall ensure that such
procedures shall be designed and executed for nimbleness, speed, and efficiency;
(viii) shall take appropriate steps to ensure that RDIF:
a. collects all moneys due to the RDIF and
b. avoids unauthorized, irregular and wasteful expenditure.
Part 5B: Rules Related to Accounting
Rule 45 Accounts. RDIF shall maintain proper accounts and other relevant records and prepare an
annual statement of accounts in such form as may be prescribed by the EC of ANRF in consultation
with CAG. Accounts of the RDIF shall be prepared every year showing receipts from all sources
(DST, SLFMs, Interest etc.) and all disbursements (to SLFMs, operational expenditures of RDIF) for
the year, surplus or deficit generated during the year and changes in the liabilities and assets.
Rule 46 Period of Accounts. The Annual Accounts of RDIF shall record transactions which takes
place during a financial year running from 1st April to 31st March.
Rule 47 Currency. The accounts of RDIF shall be maintained in Indian Rupees. Foreign currency
transactions and foreign aid, if any, shall be brought into account after conversion into Indian Rupees
on the date of such transaction.
Rule 48 Principal of Accounting. The RDIF shall prepare an accounting policy (cash basis, accrual
basis or dual basis) in consultation with CAG and prepare its account as per the approved accounting
principal.
Rule 49 Capital or Revenue Expenditure. Significant expenditure incurred with the object of
acquiring tangible assets of a permanent nature (for use in the RDIF and not for sale in the ordinary
course of business) or enhancing the utility of existing assets, shall broadly be defined as Capital
expenditure.
Subsequent charges on maintenance, repair, upkeep and working expenses, which are required to
maintain the assets in a running order as also all other expenses incurred for the day-to-day running of
the organisation, including establishment and administrative expenses shall be classified as Revenue
expenditure. Capital and Revenue expenditure shall be shown separately in the RDIF Accounts.
Rule 50 Principles for allocation of expenditure between Capital and Revenue. The following are
the main principles governing the allocation of expenditure between Revenue and Capital:
(i) Capital shall bear all charges for the first construction and equipment of a project as well
as charges for intermediate maintenance of the work while not yet opened for service. It
shall also bear charges for such further additions and improvements, which enhance the
useful life of the asset, as may be sanctioned under rules made by competent authority.
(ii) Subject to Clause (iii) below, revenue shall bear subsequent charges for maintenance and
all working expenses. These embrace all expenditure on the working and upkeep of the
project and also on renewals and replacements and additions, improvements or extensions
that are revenue in nature as per rules made by the RDIF.
(iii) In the case of works of renewal and replacement, which partake expenditure both of a
capital and revenue nature, the allocation of expenditure shall be regulated by the broad
principle that Revenue should pay or provide a fund for the adequate re- placement of all
wastage or depreciation of property
originally provided out of capital grants. Only the cost of genuine improvements, which
enhance the useful life of the asset whether determined by prescribed rules or formulae, or
under special orders of RDIF, may be debited to Capital.
(iv) Expenditure on account of reparation of damage caused by extraordinary calamities such
as flood, fire, earthquake, enemy action, etc., shall be charged to Capital, or to Revenue,
or divided between them, depending upon whether such expenditure results in
creation/acquisition of new assets or whether it is only for restoring the condition of the
existing assets, as may be determined by RDIF according to the circumstance of each
case.
(v) Expenditure on a temporary asset cannot ordinarily be considered as a capital expenditure
and shall not, except in cases specifically decided on the advice of the CAG, be debited to
a Capital Head.
Chapter 6: Selection and Contract Management for SLFMs
Rule 51 Methods of Selection of SLFMs. The method of selection of SLFMs shall be Quality and
Cost Based Selection (QCBS) and nomination basis as approved by the EC in the Selection of
Second Level Fund Managers (attached in Appendix 3).
Rule 52 Quality and Cost Based Selection (QCBS) for Commercial SLFMs. QCBS may be used
for selection of SLFMs as approved by the EC.
(i) In QCBS initially the quality of SLFMs is scored as per quality criteria announced in
the RFP. Only those responsive proposals that have achieved at least a minimum
specified qualifying score in quality criteria are considered further.
(ii) After opening and scoring, the cost criteria of qualitatively qualified bidders, a final
combined score is arrived at by giving predefined relative weightages for the score of
quality criteria of the SLFM and the score of cost-criteria of the SLFM.
(iii) The RFP shall specify the minimum qualifying score for the quality criteria and the
relative weightages to be given to the quality and cost. The SLFM with the highest
weighted combined score (quality and cost) shall be selected.
(iv) The weightage of the quality criteria in no case should exceed 90 percent.
Rule 53 Execution of Contribution/Loan Agreements between RDIF and SLFMs. RDIF shall
enter into an appropriate legal agreement (Contribution/Loan) with SLFMs. The following principles
should be observed while entering into such agreements.
(i) General Principles:
a. The terms of such agreements must be precise, definite and without any
ambiguities.
b. Details of RDI-intensive technologies/ R&D and RDIF Priority Sectors as approved
in the Investment Thesis of RDIF (attached in Appendix 1)
C. Periodicity of fund transfer (ref Rule 28)
d. Details of SLFM fund requirements (ref Rule 28)
e. Details of release of funds from RDIF to SLFMs (ref Rule 29)
f. Limits to use of RDIF funds in projects
g. SLFMs shall prepare their own investment guidelines to govern their follow-on
investments in companies including startups.
h. Technology Acquisition limits
i. Exceptions and Exclusions
j. Clauses related to conflict of interest
k. Clauses related to arbitration
(ii) Specific to Contribution Agreement. The terms of Contribution Agreements
must include clear specifications of the following:
a. Funding Terms for RDIF contribution to AIF (ref Rule 30)
b. Term Life (ref Rule 31).
C. Limits to RDIF Financial Contributions (ref Rule 32)
d. Management Fees (ref Rule 33)
e. Carried Interest (ref Rule 34)
(iii) Specific to Loan Agreement. The terms of Loan Agreements must include clear
specifications of the following:
a. Interest Rates (ref Rule 36)
b. Tenors (ref Rule 37)
C. Management Fee (ref Rule 38)
d. Lock-in Period (ref Rule 39)
e. Investment Limit of RDIF (ref Rule 40)
f. In the case of simple pass-through: Net interest margin, tenor, and moratorium
requirements
Rule 54 Monitoring Contracts. The RDIF should be involved throughout in the monitoring of
SLFMs and continuously monitor their performance so that it is in line with RDIF's objectives.
APPENDIX 1: Investment Thesis of RDIF
1. Introduction.²The Investment Thesis serves as a strategic framework to guide the investment
activities of the Research, Development, and Innovation Fund (RDIF), which is established as a
Special Purpose Fund (SPF) under the Research, Development and Innovation scheme. It is
designed to fulfil RDIF's mandate as outlined by the Government of India.
2. Background. Research, development, and innovation (RDI) remains essential to India's
economic security, strategic purpose, and self-reliance. To retain strategic autonomy and
competitiveness, India must rank amongst the top three to five globally, in five to 10 of our
chosen key technology areas.
To achieve this, India has built strength in applied R&D. India occupies global top- five positions
for high-impact research in 45 out of 64 critical technologies on the 2024 Australian Strategic
Policy Institute (ASPI) Critical Technology Tracker³; a top-three position in scientific
publications per year; a top-three position in the number of science and engineering PhDs; and a
top-seven position in resident patent filings. India has launched dedicated programmes – including
the National Mission on Integrated Cyber Physical Systems, the National Quantum Mission, the
India AI Mission, inter alia – to gain strategic autonomy in emerging technologies.
Despite this, India's private sector was responsible for just 36.4% of India's R&D investments (as
a percentage of GDP) in 2021. Combined public and private R&D investment totalled just 0.64%
of GDP. This is due the following:
2.1. Special nature of R&D scaling and RDI-intensive technologies⁴. Private underinvestment in
RDI is caused by the novelty and uncertainty involved in applying scientific advances to
commercial opportunities. Entities scaling RDI- intensive emerging technologies derive value
from (a) new advances in underpinning science bases, and (b) new applications of these
advances to use-cases, unlocking new markets. This novelty is essential to the high economic
returns and capability that RDI generates. However, it also multiplies failure points in
technology development, and the uncertainties accompanying such failure. This affects both
innovators and investors.
² The Guidelines balance three factors: (a) accountability to Parliament for public funds (b) encouraging private investors to invest in RDI-
intensive technology innovators (c) derisking Indian companies including innovating RDI-intensive technologies, who are RDIF's final
beneficiaries.
³ Critical Technology Tracker Report. (2024). Australian Strategic Policy Institute. See Appendix 1: Top 5 countries visual snapshot (2019–
2023)
⁴ Government's case for (a) intervening in the private investment market (b) restricting use of RDIF's taxpayer funds to R&D/ RDI-
intensive technologies (c) a flexible, but rigorous, definition of exactly what such technologies are – see below.
2.2. Risks affecting innovators. For innovators, the aforesaid failure points and uncertainty
impinge on every stage of R&D scaling, including (a) product development, challenged by
untested functionality and architectures of novel technologies; through (b) production,
complicated by undefined value chains, immature supply networks, and the absence of
established technical or regulatory standards; to (c) marketing and adoption, hampered by
unpredictable user behaviour and market readiness for new technologies. These risks
collectively impact cashflow volatility, escalating the risk of enterprise failure, especially for
early-stage firms.
2.3. Risks affecting investors. The novelty and uncertainty of RDI also limits the availability of
conventional risk assessment frameworks typically used by private investors such as those
underpinning capital asset pricing models in more mature domains. Equally, investors can
find their understanding of scientifically complex RDI-based projects limited, relative to that
of the innovators seeking their investment.
This information asymmetry creates uncertainty for private investors in evaluating the
viability of investments in RDI-intensive technologies, and deterring principal-agent
problems such as adverse selection (innovators understating their technologies' risks to seek
under-priced capital) and moral hazard (investees misusing funds for purposes other than
innovation financing). This impacts investors' cashflows and returns, deterring the private
investment essential to long-term scaling of RDI.
2.4. RDIF Solutions. RDIF addresses these challenges by
(i) Financially supporting eligible entities developing RDI-intensive
technologies with capital at:
(a) developmental stages (Technology Readiness Level 4 and above) conducive to
scaling R&D;
(b) rates sufficiently low to survive failure risk; and
(c) tenures adequately long to recover from failure, and sustain R&D's extended
gestation periods;
(ii) Routing these funds via Second Level Fund Managers, which would also include private
investors, at rates low enough to limit their risk when investing in RDI-intensive
technologies. This blended financing approach familiarises India's private investors
with emerging technologies, to:
(a) reduce investment uncertainty; and
(b) mobilise private capital to R&D at large scales over the long term.
3. Objectives. RDIF is set up with the following objectives:
3.1. Encourage the private sector to scale up RDI in sunrise domains and in other sectors relevant
for economic security, strategic purpose, and self-reliance;
3.2. Finance transformative projects at higher levels of Technology Readiness Level (TRL) of
4 and above.
3.3. Support acquisition of technologies which are critical or of high strategic importance;
3.4. Facilitate setting up of a Deep-Tech Fund of Funds.
RDIF's Investment Thesis framework is designed with the intention to achieve the
aforesaid objectives.
4. Encouraging the Private Sector to Scale Up RDI: Access to Funding. To encourage
private sector scaling of RDI, RDIF shall:
4.1. Make funds available to Eligible Technology Entities (as defined in Para 6 below)
including startups scaling up R&D from TRL 4 onward:
(i) Through financing or refinancing⁵ via (a) long-term loans (including optionally
convertible debt), which are expected to be unsecured (b) equity, especially in the
case of startups (c) a combination of both;
(ii) With patient capital at low rates so as to moderate the risks and sustain the extended
gestation periods of scaling up R&D;
(iii) But not via grant financing or short-term loans.
4.2. Channel these funds via Second Level Fund Managers (SLFMs), which shall include:
(i) Alternative investment funds (AIF)
⁵ "The RDI Scheme aims to provide long-term financing or refinancing with long tenors at low or nil interest rates to spur private sector
investment in RDI." https://www.pib.gov.in/PressReleseDetail.aspx?PRID=2141130
a. These may also include AIFs which themselves invest in units of other AIFs as
permitted in the Securities and Exchange Board of India (Alternative Investment
Fund) Regulations, 2012. Such an AIF would be referred to as a Fund of Funds. In
such cases, these Funds of Funds shall ensure that any daughter AIFs to which it
contributes RDIF funds (a) shall not themselves invest RDIF funds in units of
other AIFs (b) shall themselves comply with all provisions specified for, and be
treated as, SLFMs in the Implementation Guidelines.
(ii) Development finance institutions (DFIs);
(iii) Non-banking finance corporations (NBFCs), and
(iv) Focused research organisations (FROs);
4.3. Provide these funds to SLFMs as:
(i) Contributions to AIFs, typically via purchase of units in Schemes of AIF Trusts;
(ii) Loans, at low rates with extended tenors.
5. Sunrise Domains: RDIF Priority Sectors. To achieve Government of India objectives in
targeting sunrise domains, RDIF shall fund Eligible Technology Entities as defined in Para 6
below:
5.1. In sunrise sectors:
(i) Energy security and transition, and climate action;
(ii) 'Deep Technology' including quantum computing, robotics, and space;
(iii) Artificial Intelligence and its application to Indian problems, including in agriculture,
health, and education;
(iv) Biotechnology, biomanufacturing, synthetic biology, pharmaceuticals, and medical
devices;
(v) Digital economy, including digital agriculture;
5.2. In other sectors:
(i) Technologies whose indigenization is important for strategic reasons or for economic
security and Atmanirbharta;
(ii) Any other sector or technology deemed necessary in the public interest;
5.3. In sectors updated to these lists with the approval of the RDIF Empowered Group of
Secretaries (EGoS), on the recommendation of the ANRF Executive Council;
5.4. In a manner that supports entire industry sectors in scaling R&D, from laboratory-tested
components to manufactured products and proven systems. RDIF will achieve this by
methodically targeting funding to companies working across the entire value network involved
in transitioning R&D from laboratory to commercialisation. This will help create new
industries, or transform existing ones, around Indian RDI.
6. Eligibility Criteria for Receiving RDIF Funds via SLFMs.
6.1.RDIF funds shall be provided by SLFMs exclusively, at the time of investment by the
SLFM⁶ to⁷ Eligible Technology Entities, which:
(i) Are defined as any legal entity registered in India, and duly incorporated and
governed under the applicable laws of India (including the Companies Act 2013,
the Indian Partnership Act, 1932, the Limited Liability Partnership Act, 2008, etc.;
this to include startups as defined in the Department for Promotion of Industry and
Internal Trade Notification G.S.R. 127(E) dated 19 February 2019, as may be
modified from time to time); with principal place of business/operations in India;
engaged in developing RDI-intensive technology at Technology Readiness Level
4 and above,
⁶ The objective of this section is to achieve strategic autonomy and a product economy for India. It therefore ensures that controlling stakes
remain with resident Indian citizens, so that RDIF-funded companies and technologies are not acquired by those outside India, in a manner
that undermines this objective. Equally, the section allows for Indian companies to raise foreign direct investment, to scale to globally-
competitive standards consequent to RDIF funding.
⁷ As defined in the Department for Promotion of Industry and Internal Trade Notification G.S.R. 127(E) dated 19 February 2019.
(ii) Are under the control⁸ of resident Indian citizens⁹, as defined in the Department
for Promotion of Industry and Internal Trade (DPIIT)'s Consolidated FDI Policy
(2020);
(iii) Have their registered global headquarters in India. This ensures that global
revenues and profit would be consolidated under the Indian- registered entity.
6.2. Eligible Technology Entities receiving RDIF funds shall, for all Intellectual Property Rights
(IPRs)¹⁰, as defined in applicable Indian law and rules, developed as a consequence of RDIF
funding:
(i) Register such IPR in India, under applicable Indian law and rules;
(ii) Retain ownership of such IPR, for the term of the IPR (i.e. the period for which the IPR
is valid) under applicable Indian law.
6.3. Eligible Technology Entities receiving RDIF funds shall comply with applicable Government
of India rules and directions related to security, export control¹¹, foreign acquisition or
control, and other strategic concerns.
6.4. Many of the technologies developed by RDIF will offer new capabilities relevant to
Government agencies e.g. under Aatmanirbhar Bharat. RDIF shall proactively reach out to
Government of India agencies concerned, to inform and coordinate with their decision-
making in this regard.
7. Financing Transformative Projects.
⁸ DPIIT Consolidated FDI Policy 2020 Section 2.1.9: "‘Control' shall include the right to appoint a majority of the directors
or to control the management or policy decisions, exercisable by a person or persons acting individually or in concert, directly
or indirectly, including by virtue of their shareholding or management rights or shareholders agreements or voting
agreements. For the purposes of Limited Liability Partnership, 'control' will mean right to appoint majority of the designated
partners, where such designated partners, with specific exclusion to others, have control over all the policies of the LLP."
⁹ DPIIT Consolidated FDI Policy 2020 Section 2.1.45: "‘Resident Indian Citizen' shall be interpreted in line with the
definition of 'person resident in India' as per FEMA, 1999, read in conjunction with the Indian Citizenship Act, 1955."
¹⁰ All applicable Indian laws, rules, and guidelines would apply. IPR include patents, trademarks, registered designs,
copyrights and layout design of integrated circuits. For example, these would include but not be limited to: The Patents Act,
1970, as amended by the Patents (Amendment) Acts of 1999, 2002, and 2005; The Semiconductor Integrated Circuits
Layout-Design Act, 2000; The Protection of Plant Varieties and Farmers' Rights Act, 2001; The Designs Act, 2000; The
Trade Marks Act, 1999; The Copyright Act, 1957; and others. The descriptive list, designed to comprehensively cover the
results of RDI funding, derives from Government of India precedent from the Department of Telecommunications' Telecom
Technology Development Fund.
¹¹ Including the Special Chemicals, Organisms, Materials, Equipment, and Technologies (SCOMET) list overseen by the
Director General of Foreign Trade (DGFT).
7.1. Funded Projects. SLFMs shall utilize RDIF capital for projects advanced by Eligible
Technology Entities from TRL 4 or higher. Project selection shall be carried out by the
SLFMs, strictly within the sectors and project types defined in the RDIF mandate and fund
allocation.
7.2. Funding Limit. The financing under the scheme shall be limited to not more than 50 per cent
of the total assessed cost of the project. The balance financing should be arranged by the
project proponent from self or commercial sources. In exceptional types of projects/ sectors,
the financial limit for government share in financing can be relaxed with the approval of the
EGoS.
(i) Loan. For Eligible Technology Entities receiving debt funding (via loan or optionally
convertible debt) from the SLFM, this shall be calculated as 50% of the project cost, as
specified in a proposal for achieving clearly-defined deliverables and outcomes of a
project.
(ii) Equity. For Eligible Technology Entities receiving funding via equity or equity linked
instruments from the SLFM, this shall be calculated as 50% of the value of each
funding round. This value would be considered when it constitutes the entire cost of
achieving the objectives proposed at the time of raising the funds. At every stage of
funding, RDIF funding will remain 50%.
Note: Once the project (in case of loan) or objectives (in case of equity financing) have
been completed, the Eligible Technology Entities may be eligible for RDIF funds for
follow-on projects / objectives.
8. Research, Development, Innovation.
8.1. RDIF funds shall only be used to support RDI-intensive technologies, which¹²
(i) are generally based on advances in science and engineering innovation;
(ii) typically have high uncertainty (and consequent failure risks) in functionality,
adoption, production, standards / architecture;
(iii) may entail investment in scientific or engineering R&D before product
development.
¹² The characteristics derive from Murray et al's work at the Massachusetts Institute of Technology (MIT), Day and
Schoemaker's work at the Wharton School, Kolev et al's work at the USPTO, Rogers' work at the University of New Mexico,
Auerswald and Branscomb's work at George Mason University and IBM, Swati Chaturvedi at Propel (X), among others. These
are definitive authorities in the fields of emerging technologies, Deep Tech, and early-stage technology development and
entrepreneurship. (Swati Chaturvedi is responsible for first coining the term 'Deep Tech' in 2015.) The characteristics remain
consistent with global government initiatives.
8.2. Ministries of the Government of India seeking inclusion of a specific technology under
the Scheme shall submit their proposals to the DST for consideration by the EC ANRF,
which shall thereafter be recommended to EGoS for final approval.
Note: RDIF will not fund low-end technology projects or what is generally perceived as "routine"
R&D. The Executive Council may modify these characteristics and conditions as it deems fit.
9. Markets. RDIF may also strive to target markets that:
9.1. Possess strong demand, driving early adoption;
9.2. Are highly scaled globally, expanding adoption;
9.3. Promise high compounded annual growth.
10. Selection of SLFMs. Selection of SLFMs shall be in accordance with the SLFM Selection
Guidelines (Appendix 3).
11. Limits to RDIF Financial Contributions to SLFMs: Contribution to AIFs.
11.1. To encourage private investment in RDIF Priority Sectors and RDI- intensive
technologies: RDIF shall contribute to AIFs as a percentage of aggregate capital as may be
determined by the Executive Council; this percentage reflecting the AIFs' focus on RDI-
intensive technologies and RDIF Priority sectors, so as to enable increased RDIF funding to
these technologies and sectors. RDIF-funded Funds of Funds shall contribute RDIF capital to
AIFs via the same approach as above.
11.2. RDIF Funds Exclusive to RDI-intensive technologies and Priority Sectors. Across all
categories above, SLFMs shall invest all funding contributed by RDIF only in Eligible
Technology Entities that focus on (a) RDI- intensive technologies, as defined in Para 8 above
(b) RDIF Priority Sectors, as defined in Para 5 above.
11.3. The Executive Council may mandate a minimum contribution by SLFMs from private
funds to RDIF priority sectors and RDI-intensive technologies, alongside the use of RDIF
capital for these purposes; should this be deemed fit.
12. Limits to RDIF Financial Contributions to SLFMs: Loans. The maximum limit on capital that
RDIF would provide to SLFMs via loan mode may be determined by the Executive Council.
13. Acquisition of technologies which are critical or of high strategic importance. Financing of
acquisition of technologies that are critical or of high strategic importance shall also be
permissible. Acquisition must occur within the context of a wider project that translates to the
development of a product.
13.1. The definition of criticality and strategic importance shall be recommended by the
Executive Council for the approval of EGoS.
13.2. The total financing from an SLFM from RDIF funds for such acquisition should not
exceed the percentage limit, as may be prescribed by the Executive Council, of the total
funds allocated to that SLFM.
13.3. Such a limit shall not apply in cases where an SLFM is constituted exclusively or
acquisition.
14. Encouraging the Private Sector to Scale Up RDI: Comprehensive Derisking Partnerships. To
maximise success in scaling Indian private sector RDI:
14.1. RDIF will form outreach, awareness and information partnerships with Government
agencies procuring and adopting technology, particularly in strategic domains.
14.2. RDIF will ensure such agencies are informed about the Indian technological
capabilities being advanced by its funding, that may be relevant to their needs and
procurement plans.
14.3. Equally, RDIF will inform SLFMs and their final investee companies and startups about
such agencies' requirements, informing their R&D scaling.
14.4. Such coordination will follow an open, transparent, equitable approach.
14.5. RDIF will also form such partnerships with public institutions and organisations
containing research equipment and other technology derisking facilities which Indian
RDI-intensive technology innovators may find essential.
15. Exceptions and Exclusions.
15.1. RDIF shall not finance next generation labs for pre-commercial R&D. However, the
cost of setting up such labs may form part of larger proposals to be financed as a
project by RDIF.
15.2. RDIF shall not finance RDI by government entities and central public sector
enterprises (CPSEs), unless they are involved in strategic projects in partnership with
the private sector.
15.3. RDIF shall not provide grant financing. RDIF shall also not provide short- term loans,
which can be met from commercial finance.
Annexure 1A to Appendix 1: Special Provisions for Strategic Sectors
1. To comply with the Government of India's objectives to scale up RDI for economic security,
strategic purpose, and self-reliance: RDIF shall include terms in its contractual agreements with
SLFMs.
2. These would require SLFMs to include special provisions in their own investment/ loan
agreements with Indian companies and startups operating in strategic sectors.
2.1. In specific and exceptional situations, related to
(i) Times of emergency;
(ii) Protection of national interest or when required in public interest;
(iii) Health and safety requirements, for Government to act in public interest;
(iv) National security reasons;
2.2. RDIF would retain the option, following guidance from the Executive Council, to use RDIF-
funded IP or its commercialised forms in the national interest¹³.
¹³ The vision of the RDIF is to achieve Aatmanirbharta and strategic autonomy. This provision advances this vision.
APPENDIX 2: Financing Framework for RDIF to fund SLFMs
1. Background. These guidelines are prepared in accordance with the Research Development and
Innovation Fund (RDIF) Investment Thesis (Appendix 1). They specify general conditions on
which RDIF allocates funds to Second Level Fund Managers (SLFMs) in a manner that complies
with the broad objectives set out by the Government of India.
2. First Level Custodian or Fund Manager. An Independent Business Unit of the Anusandhan
National Research Foundation acts as first-level custodian or fund manager of RDIF, with a
separate team that shall specifically manage the fund. This fund shall be in the form of 50-year
interest free loan from the Government of India, and act as scheme corpus. The funds to the corpus
shall be provided based on the half-yearly net requirement of funds for disbursement to the
SLFMs.
3. Second Level Fund Managers. SLFMs refers to entities specified in the RDIF Investment
Thesis.
4. Fund Flow. Funds from the Consolidated Fund of India (CFI) flow to RDIF through the
Department of Science and Technology (DST), and from RDIF to the SLFM for further
deployment in private Eligible Technology Entities engaged in scaling R&D, and vice versa, in a
manner as specified in the Special Financial Rules of RDIF.
5. Investment Streams. Funds from RDIF to SLFMs to be in the form of the following investment
streams:
5.1. Investing via contribution to Alternative Investment Funds (AIFs), including those which
invest in units of other AIFs in arrangements referred to in this document as Funds of Funds;
and
5.2. Loan financing.
Note: No grants or short-term loans are permissible by RDIF.
6. Provisions Specific to AIF Investment Stream. RDIF contributions in the AIF investment
stream shall normally be via purchase of Units in a Scheme of the AIF Trust following the criteria
given below:
6.1. Eligible entities.
(i) AIFs as defined in Securities and Exchange Board of India (Alternative Investment
Fund) Regulations, 2012. These can be existing or new AIFs.
(ii) Fund of Funds, which shall in turn invest these funds in units of AIFs.
6.2. Investment Principles. RDIF to allocate funds to AIFs through three suggested modes of
contribution:
(i) Mode 1: RDIF provides capital at an internal rate of return that is lower than the
hurdle rate offered by the AIF to private contributors. AIFs would be required to
prioritise distributions to RDIF, e.g. by providing RDIF with a higher position in the
distribution waterfall.
(ii) Mode 2: RDIF provides capital to the AIF at the same hurdle rate and/ or internal
rate of return as other contributors. It would receive distributions in pari passu with
other contributors to the AIF.
(iii) Mode 3: RDIF provides capital at an internal rate of return that is higher than that
offered by the AIF to private contributors. RDIF would take a lower position in the
distribution waterfall.
Notes.
(i) Details for all Modes may be worked out by the RDIF Management Team.
Specific terms and other Modes would be considered by the Executive Council.
(ii) RDIF-funded Funds of Funds shall contribute RDIF capital to AIFs via the
same Modes specified above.
6.3. Terms of Allocation of Funds. RDIF to allocate funds to AIFs on the broad terms outlined
below. The Executive Council shall modify these terms as needed. RDIF-funded Funds of
Funds shall contribute RDIF capital to AIFs on the same terms.
(i) Investment Thesis of RDIF. The Investment Thesis (which may be part of the Private
Placement Memorandum) of the AIF should align to the greatest possible extent with
the RDIF Investment Thesis (Appendix 1).
(ii) Underlying Investments of SLFMs. Investment by SLFM should be
(a) In the form of equity, debt, or a combination of both;
(b) In Eligible Technology Entities engaged in developing RDI- intensive
technology projects at TRL 4 and above, in sectors as per the RDIF
Investment Thesis (Appendix 1);
(c) Combining RDIF and private capital in proportions reflecting the alignment
of the AIF's and RDIF's focus areas, as specified in the RDIF Investment
Thesis Para 11.
(iii) Funding Parameters. The following parameters placed in Table 2.A shall be decided
by the Executive Council from time to time. Illustrative example figures are also
summarised in Table 2.A.
Table 2.A
Example Funding Parameters for Investment Stream 1 AIF
+-----+---------------------------------------------+------------------------------------+
| S. | Funding Parameters | Illustrative Example |
| Nos.| From RDIF to SLFM | |
| | to be decided by the Executive | Values to be decided by the |
| | Council | Executive Council |
+-----+---------------------------------------------+------------------------------------+
| 1 | Rate of return for Mode 1 Funding | IRR at 5-6% |
| 2 | Distribution priority for Mode 1 Funding | RDIF to receive higher priority in |
| | | distributions |
| 3 | Rate of return for Mode 2 Funding | As provided by AIF to all contributors |
| 4 | Distribution priority for Mode 2 Funding | In pari passu with all contributors to |
| | | the AIF |
| 5 | Rate of return for Mode 3 Funding | RDIF to receive IRR higher than |
| | | provided to private contributors |
| 6 | Distribution priority for Mode 3 Funding | RDIF to receive lower priority in |
| | | distributions |
| 7 | Term | Up to 15 years inclusive of extension |
| 8 | Capital Contribution and Investment | As a percentage: per RDIF |
| | Limits for SLFM (AIFs) | Investment Thesis Para 11 |
+-----+---------------------------------------------+------------------------------------+
Notes:
1. Internal Rate of Return: the target rate of return offered by the AIF on RDIF capital (the discount rate at
which net present value of all cashflows from AIF becomes zero).
2. Distributions: RDIF's position in the distribution ‘waterfall' where the AIF returns capital to its
contributors.
3. Fund Term: the lifespan of the AIF. RDIF would prefer extended terms, reflecting the greater patience
needed with R&D / RDI-intensive technology investments.
4. Capital Contribution and Investment Limit: the amount of capital RDIF would allocate to the SLFM, as
a maximum percentage of aggregate capital contributions received by the AIF at every
close.
(iv) Eligible Management Fees. RDIF will accept the following amounts charged by an
AIF SLFM:
(a) A management fee charged by the SLFM not exceeding 2% per annum (i) of
the aggregate Capital Commitment at the beginning of the year, from the
initial closing date until the end of the Commitment Period (ii) of the actual
invested capital, if it is lesser than the committed capital, or as a percentage
of the underlying value of the assets under management (AUM) of the fund,
after the end of the Commitment Period;
(b) Carried Interest not exceeding 20% of the AIF SLFM's distributions after
return of capital, hurdle rate, and catch-up;
(c) As may be decided by the Executive Council as the case may be from time
to time. These terms would also be applied by RDIF-funded Funds of Funds
to AIFs to which they contribute,
i.e. daughter AIFs.
(v) Drawdowns. RDIF to make Capital Commitments to the AIF SLFM within a period from
the date of a Drawdown Notice issued by the AIF SLFM as mentioned in the Special
Financial Rules of RDIF.
7. Provisions Specific to Loan Financing Investment Stream. RDIF to provide loan financing to
eligible SLFMs listed below.
7.1. Eligible entities. RDIF to provide loan financing to
(i) Focused Research Organisations;
(ii) Development Finance Institutions;
(iii) Non-banking finance corporations (NBFCs).
7.2. Investment Principles. RDIF to fund eligible SLFMs listed in 7.1 above through low-interest
debt on concessional terms. These will include lower rates, over longer tenors, than offered
by private contributors.
7.3. Terms of Allocation of Funds. RDIF would invest on the broad terms outlined below. The
following terms shall be decided by the Executive Council from time to time. Illustrative
example figures are summarised in Table 2.B.
(i) RDIF Investment Thesis. RDIF contributes to eligible SLFMs listed in 7.1 above which
have technology commercialisation objectives aligned with RDIF's Investment Thesis
(Appendix 1).
(ii) Underlying Investments of SLFMs. RDIF contributes to eligible SLFMs listed in 7.1
above which shall, in accordance with applicable law and regulation, invest:
(a) In the form of equity, debt (including optionally convertible debt), or a
combination of the equity and debt;
(b) In Eligible Technology Entities engaged in developing RDI- intensive
technology projects at TRL 4 and above, in sectors as per the RDIF Investment
Thesis (Appendix 1).
However, RDIF does not provide grant funding.
(iii) Funding Parameters. The following parameters placed in Table 2.B shall be decided
by the Executive Council from time to time. Illustrative example figures are also
summarised in Table 2.B.
Table 2.B
Funding Parameters for Investment Stream 2 Loan Financing
+-----+-------------------------------+-----------------------------------------+
| S. | Funding Parameters | Illustrative Example |
| Nos.| | Values to be decided by Executive |
| | | Council from time to time |
+-----+-------------------------------+-----------------------------------------+
| 1 | Interest Rate | Low; for strategic projects, these may |
| | | be retained even at 1-2%. |
| 2 | Tenor | Up to 20 years. |
| 3 | Capital Contribution and | RDIF contributions in the loan mode will|
| | Investment Limits | be limited only by the Executive Council.|
| 4 | Tranches | Funding shall be released in tranches |
| | | depending on the underlying investment |
| | | requirement of the SLFM. Annually every |
| | | SLFM shall provide an estimate of their |
| | | annual money requirement and it will be |
| | | released by RDIF as and when required. |
| | | The quarterly estimated drawdowns from |
| | | the RDIF to SLFMs shall be honoured in |
| | | 30 days. |
| 5. | Lock-in period | 10-15 Years, subject to pre-payment |
| | | being permitted without penalty. |
+-----+-------------------------------+-----------------------------------------+
(iv) Eligible Management Fees. RDIF will accept a management fee charged by the SLFM
not exceeding 1% per annum of the total amount of the loan provided by RDIF to the
SLFM.
8. General Provisions to Ensure RDIF Mandate. RDIF funds shall be used exclusively for the
core purpose for which Government has established RDIF. To ensure that the low-interest
financing fulfils the Budget mandate to encourage the private sector to significantly scale up
research and innovation in sunrise domains, RDIF shall ensure the following general provisions
across all Investment Streams:
8.1. Reports and Information from SLFMs to RDIF. RDIF requires from all SLFMs, in a format to
be approved by the Executive Council and adapted to the specific requirements of each
Investment Stream:
(i) Reports within 60 days of the end of every six-month period, from the date of
execution of the Contribution/ Investment / Loan agreement between RDIF and the
SLFM: including unaudited financial statements of the SLFM, and status reports on
the SLFM's investments (including investee companies, technologies, sectors, and
other criteria defined by the RDIF Investment Thesis);
(ii) Annual reports within 90 days of the conclusion of every fiscal year including audited
financial statements and annual valuation of the assets of the SLFMs; a statement of
account in relation to the units held by RDIF as a contributor; and status reports on the
SLFM investments (including investee companies, technologies, sectors, and other
criteria defined by the RDIF Investment Thesis);
(iii) The ability to visit Eligible Technology Entities invested in by the SLFMs to observe
performance;
(iv) Meetings with SLFM teams for joint review.
Note: RDIF shall retain the right to audit any SLFM via a professional agency.
8.2. Reports from RDIF to Executive Council and EGoS. Based on information provided by
SLFMs, RDIF shall provide the Executive Council with the following data on an annual
basis; this to be further shared with EGoS:
(i) Technological advancement: Number of prototypes, proofs-of- concept, or
innovations developed from the funded projects over the years measured relative
to the Technological Readiness Level (TRL) of the projects at the time of sanction.
Other relevant parameters such as commercial readiness, market readiness, etc. to
be considered as well.
(ii) Commercialization and Industry Impact: Number of projects leading to market-
ready products or collaborations with industries resulting from the funded projects.
(iii) Catalysing private/commercial capital for R&D: Amount of private capital
mobilized at the level of SLFMs or at the project level.
(iv) Scheme sustainability: Number of projects which make it to commercial stage and
the revenue of such units.
(v) Ability to create project visibility and facilitate exits: Number of projects
successfully exited at the end of 5/10/15 years.
Note: Union Cabinet has approved a Design and Monitoring Framework (DMF) placed at
Appendix 1. The above data will be used to monitor the Scheme as part of this Cabinet-
approved framework.
8.3. Reporting from RDIF to SLFMs. RDIF shall periodically share with all SLFMs, a list of all
SLFMs and the Eligible Technology Entities in which they have invested. This would be
used by SLFMs to ensure that its own financing does not drive RDIF funding above the limit
in Appendix 1 Para 7.2.
9. Conflict of Interest. RDIF shall take measures, including but not limited to the disclosure of
interests and information and structuring of its decision-making processes, to remove the
possibility of conflict of interest amongst any RDIF employees or personnel, involved in any
decision related to the provision and use of RDIF funds.
Annexure 2A to Appendix 2: Design & Monitoring Framework Research,
Development, and Innovation (RDI) Scheme
As Approved by Union Cabinet
Impact the scheme is aligned with:
To mobilize private investments in R&D sector and thereby increase the total investment in R&D from present
(~0.65%) to more than 1% (world average being ~2.7%).
Enhanced Indian research and innovation ecosystem in priority sectors, aligned with the vision of recent
Union Budgets and India's long-standing R&D/STI Policies, focusing on technological advancement for
Atmanirbhar Bharat.
+-----------------+-------------------------------------+-----------------------------+-------------------------------------+
| RESULTS | PERFORMANCE | DATA SOURCES | RISKS |
| CHAIN | INDICATORS WITH | AND REPORTING | |
| | TARGETS AND BASELINES | MECHANISMS | |
+-----------------+-------------------------------------+-----------------------------+-------------------------------------+
| Outcome | 1. Change in India's ranking in | SPF to create digital | 1. High risk of |
| Innovation | the Global Innovation Index | system for providing | financing including |
| performance and | (GII) published by the World | data on the following | high chances of |
| global ranking, | Intellectual Property | points: - | failure of |
| Productivity | Organization (WIPO) | 1. Project | technologies and |
| growth, Economic| 2. Changes in Total Factor | progress | companies leading |
| Impact including| Productivity linked to | reports; | to potential loss of |
| high-tech exports,| innovation including the | 2. TRL | capital. |
| increased | diversity of the number of | assessments by | 2. Long gestation |
| development, | projects in sunrise sectors | technical | periods for |
| piloting, and| supported annually and | committees | maturity of |
| commercialization| aligned with national | 3. MOUS, | technologies and |
| of indigenous | priorities | partnership | low TRL maturity. |
| R&D solutions in| 3. Direct and indirect jobs | agreements, | 3. Ability to attract top |
| strategic and| created in innovation and | 4. Fund | talent from private |
| emerging | high-tech sectors | disbursement | sector, Indian |
| technology sectors.| 4. Participation of skilled | records | diaspora overseas |
| | Indian diaspora (reverse | 5. Patent records | etc. as well as |
| | brain drain) attracted into the | data; | managing the |
| | underlying investee entities | 6. Tracking | conflict of interest |
| | of RDIF | companies and | in such cases |
| | 5. Enhanced national | their products | 4. Possibility of |
| | strategic autonomy in critical | being launched | private sector |
| | sectors and technologies | with technologies | funds/companies |
| | 6. Strengthening of domestic | emerging out of | being concerned in |
| | supply chains and reduced | RDI funding | availing |
| | import dependency | | investments from |
| | 7. Contribution to improved | | 100% government |
| | health and social | | owned funds |
| | indicators through | | 5. Multiple stages of |
| | innovation-led solutions | | funding requirement |
| | 8. Improvement in the overall | | even in situations |
| | R&D ecosystem in India: | | where desired |
| | Improvement in India's | | outcomes are not |
| | rank in indices related to | | achieved. |
| | research development | | 6. In Deep Tech, |
| | | | failure of |
| | | | companies between |
| | | | Seed |
+-----------------+-------------------------------------+-----------------------------+-------------------------------------+
| Output | 1. Financial parameters: | | |
| | a) Amount sanctioned from 1st | | stage to Series A |
| | level custodian to 2nd level | | funding is 95%. |
| | manager annually; | | 7. Low private sector |
| | b) Downstream investment | | participation in co- |
| | commitment by 2nd level | | funded R&D |
| | fund manager to the | | projects |
| | individual project | | 8. Delays in fund |
| | c) IRR of the underlying | | disbursal due to |
| | funds/investments | | delay in |
| | | | identification of |
| | 2. Giving impetus to the R&D | | projects |
| | ecosystem: Number of | | 9. Weak |
| | projects supported annually, | | IP protection |
| | total and sector wise | | and |
| | | | commercialization |
| | 3. Intellectual Property (IP) | | pathways |
| | Generation: Number of | | 10. Lack of accessible |
| | patents, copyrights, or other | | datasets |
| | IP assets registered annually | | 11. Ethical |
| | from the funded projects | | concerns and |
| | (benchmarked against | | data privacy |
| | Industry average for patent | | |
| | filings in the specific science | | |
| | and technology domain) | | |
| | | | |
| | 4. Technological | | |
| | Advancement: Number of | | |
| | prototypes, proof-of- | | |
| | concepts, or innovations | | |
| | developed from the funded | | |
| | projects over the years | | |
| | measured relative to the | | |
| | Technological Readiness | | |
| | Level (TRL) of the projects | | |
| | at the time of sanction. | | |
| | Other relevant parameters | | |
| | such as commercial | | |
| | readiness, market | | |
| | readiness etc. to be | | |
| | considered as well. | | |
| | | | |
| | 5. Commercialization and | | |
| | Industry Impact: Number | | |
| | of projects leading to market- | | |
| | ready products or | | |
| | collaborations with | | |
| | industries resulting from the | | |
| | funding projects. | | |
| | | | |
| | 6. Catalysing | | |
| | private/commercial capital | | |
| | for R&D: Amount of | | |
| | private capital mobilized at | | |
| | the level of 2nd level Fund | | |
| | Manager(s) or at the project | | |
| | level. | | |
+-----------------+-------------------------------------+-----------------------------+-------------------------------------+
| | 7. Scheme sustainability: | | |
| | Number of projects which | | |
| | make it to commercial stage | | |
| | and the revenue of such units | | |
| | 8. Ability to create project | | |
| | viability and facilitate | | |
| | exists: Number of projects | | |
| | successfully exited at the end | | |
| | of 5/10/15 years | | |
+-----------------+-------------------------------------+-----------------------------+-------------------------------------+
| | Key Activities | Milestones | |
+-----------------+-------------------------------------+-----------------------------+-------------------------------------+
| 1. Scheme approval by the competent authority | T0 | |
| 2. Preparation of detailed operational guidelines for the scheme including | T1 = T0 + 10 weeks | |
| the process to be followed for selection of the projects, selection of 2nd | | |
| level fund managers, type of funding to be provided by 1st level custodian | | |
| to different typed of 2nd level fund manager, broad parameters for type | | |
| of funding from 2nd level fund manager to individual projects by Q1 of | | |
| FY25-26 | | |
| 3. Preparation of Liberalized Financial Rules for scheme implementation | T2 = T0 + 8 weeks | |
| 4. Scheme Launch | T3 = T1 + 4 weeks | |
| 5. Formation of Special Purpose Fund (SPF) within ANRF | T4 = T0 + 10 weeks | |
| 6. Putting in place an independent business unit | T5 = T0 + 15 weeks | |
| 7. Setting-up a digital mechanism for tracking the financial and technical | T6 = T1 + 15 weeks | |
| parameters of performance of the projects | | |
| 8. Selection and approval of 2nd level Fund Managers | T7 = T1 + 6 weeks | |
| 9. Formation of 2nd Level Fund | T8 = T6 + 4 weeks | |
| 10. Staffing of 2nd-Level Fund Managers and formation of Investment | T9 = T6 + 10 weeks | |
| Committees | | |
| 11. Scheme Outreach | T10 = T1+ 4 weeks & T8 | |
| | + 4 weeks | |
| 12. Release of Funds from CFI to SPF | T11 = T6 + 2 weeks | |
+---------------------------------------------------------+-----------------------------+-------------------------------------+
Inputs
1) Rs 1 lakh crore budgetary allocation over a period of 6 years
2) Rs 20,000 crore budgetary allocation for FY 2025-26
3) Staff for the SPF
APPENDIX 3: Selection of SLFMs
1. Quality and Cost Based Selection Method. The Union Government has decided that the RDIF
shall follow the quality and cost-based selection (QCBS) method to select SLFMs. RDIF adapts
QCBS to its mandate, to select SLFMs on the basis of:
1.1. Competence to support Indian startups and companies in scaling up R&D in sunrise sectors,
with RDIF funds;
1.2. Ability to spur private investment in scaling Indian R&D (including from more generalised
private funds with limited prior experience in R&D / RDI-intensive technologies),
leveraging RDIF funds.
2. Relative Quality and Cost Weightage in RDIF QCBS. Investment in RDI- intensive technology
companies and startups requires specialised skill-sets, owing to the technical, adoption, and agency
uncertainties that define emerging technologies. Accordingly, RDIF QCBS prioritises quality in
selecting SLFMs. RDIF QCBS allocates: 80% weightage to Quality criteria, and 20% weightage
to Cost criteria.
3. QCBS Cost Criteria. Cost criteria in the QCBS methodology aim to maximise cost efficiency in
the use of public funds. RDIF adapts this principle to RDIF's mandate to spur private-sector
driven research and innovation via concessional financing.
3.1. Cost Score. RDIF QCBS cost criteria is aligned to the investment stream via which RDIF
provides funds to SLFMs as follows:
(i) AIFs. The RDIF Implementation Guidelines permit SLFMs receiving contributions
from RDIF to charge a management fee and carried interest (Para 6 of Appendix 2
Financing Framework for RDIF to fund SLFMs). The QCBS Cost Score would
consider management fee and carried interest charged by the SLFM. SLFMs charging
lower management fee and carried interest shall have a higher cost score.
(ii) Loan financing. Where RDIF provides funds via loans, the cost score shall consider:
(a) The interest rate offered by the SLFM to RDIF; the lower the interest, the
higher the score;
(b) The net interest margin i.e. the difference between the interest rate at which any
SLFM lends capital to Eligible Technology Entities,
(c) The management fee charged by the SLFM from the RDIF (subject to a cap of
1% per annum on the amount of the loan requested); the lower the fee, the
higher the score.
Note. Specific terms would be approved by the ANRF Executive Council.
(iii) Nomination basis. QCBS cost criteria shall not apply to SLFMs that are
(a) statutory organisations (b) public institutions (c) academic/research/non-
profit organisations wholly funded by the Government of India or State Governments.
Such SLFMs shall be appointed on the basis of nomination by the EGoS, on the
recommendation of the ANRF Executive Council. For (b) and (c) above, such
nomination could be guided by Quality criteria tailored to the technology, sector, or
innovation function in which the SLFM specialises.
4. QCBS Quality Criteria for Commercial SLFMs (AIFs, DFIs, NBFCs). To select AIFs most
competent to support Indian RDI-intensive technology startups and companies in scaling up R&D
in sunrise sectors with RDIF funds, RDIF applies the following QCBS Quality Criteria, evaluated
by the Executive Council (summarised in Table 3.A with example measures, to be selected as
appropriate by the Executive Council).
4.1. Global practices in technology investment sector. QCBS Quality Criteria for selecting
SLFMs reflects global practices widely followed in the private technology investment
sector. These prioritise the SLFM Management Team's professional calibre, evaluated by
the Executive Council on the advice of the Expert Advisory Committee.
4.2. Part A | General Competence: Managing Investments and Operational Risks for Scaled
Returns. The Executive Council assesses the core competence of the SLFM team in
building consistently successful investment portfolios. This shall be irrespective of the
extent of the SLFM's RDI-intensive technology focus, allowing more general funds to also
participate and apply to RDIF. The evaluation may consider:
(i) Fund Management Team Competence: General capability of the SLFM team in
managing investments and operational risks, investee entities in the technology sector
(irrespective of RDI-intensive technology specialisation).
(a) For AIFs, this will consider the professional capabilities of Partners, the
Investment Committee, and the Advisory Board of the SLFM; and their skillsets in
managing founder teams, emerging technologies and products, finance and
investment, and resourcing and support networks.
(b) For DFIs and NBFCs, this will consider the organisation's credentials and
management team experience.
(ii) Demonstrated Track Record of Investment Management Competence: The SLFM
team's success and consistency in delivering prior Funds, through repeatable
processes, robust execution, and effective risk management.
4.3. Part B | R&D_and_RDI-Intensive Technology Focus: Orientation and Competence to
Execute RDIF Mandate. The evaluation may consider the SLFM's ability to execute
RDIF's mandate for India's RDI-intensive Technology entities. The SLFM's track record
demonstrating these competences does not need to have exclusively been in RDI-intensive
technologies. Competences shown in other technology investments would also be
considered.
(i) Investment Thesis (which may be part of the Private Placement Memorandum):
alignment with RDIF Investment Thesis (Appendix 1).
(ii) Track Record in R&D Scale Up and RDI-Intensive Technology Competence: the
SLFM's demonstrated competence with the high- uncertainty investments
characterising RDI-intensive technologies at the TRLs concerned; including its
ability to manage the complexities of technology stage / maturity, advanced science
bases, and 'hockey- stick' valuation growth (long low period, followed by
exponential increase) characterising emerging technologies;
(iii) Track Record in Investment Sizes for R&D Scale Up: the SLFM's demonstrated
competence with the larger size of investments needed to scale-up R&D. This prior
SLFM track record does not need to have been in RDI-intensive technologies, but
would involve similar investment values ('ticket sizes').
(iv) Track Record in Patience with Capital: the SLFM's demonstrated commitment to
endure the long gestation periods required to scale R&D and RDI-intensive
technologies. This prior SLFM track record does not need to have been in RDI-
intensive technologies, but would involve similar investment values ('ticket sizes').
(v) Absorption and Utilisation Capacity. The SLFM would be evaluated for its ability to effectively invest capital contributions received, in
private investees.
Table 3.A | Quality Selection Criteria for Commercial SLFMs
+-----+---------------------------------------------+-------------------------------------------------------------------------------------------------------------------------------------------+--------+-------+
| S. | Selection Criteria | Measures | Weight | Score |
| Nos.| (Options, to be selected for | (Examples, to be selected by Executive Council) | (Set by| (TBD by|
| | respective cohort by Executive | | Executive| Executive|
| | Council) | | Council)| Council)|
| | | | Example| Example|
| | | | values:| values, to|
| | | | | be kept|
| | | | | constant|
| | | | | across|
| | | | | cohorts:|
+-----+---------------------------------------------+-------------------------------------------------------------------------------------------------------------------------------------------+--------+-------+
| | Part A | General Competence: Managing Investments and Operational Risks for Scaled Returns | | |
| | (RDIF may select any or more of the options listed below, as deemed fit by the Executive Council on advice of the Expert Advisory Committee.) | | |
+-----+---------------------------------------------+-------------------------------------------------------------------------------------------------------------------------------------------+--------+-------+
| 1 | Fund Management Team | Qualitatively assessed and scored, based on expert evaluation of (for example) | | |
| | Competence: General capability of | - Team profiles | | |
| | the SLFM team in managing | - Successful scaling of operations at technology firms or prior fund investees | | |
| | investments and operational risks, | 1. AIFs: Teams, for | | |
| | investees in the technology sector | - experience leading deals and exits for technology firms; | | |
| | (irrespective of R&D/ RDI- | - successful scaling of operations at technology firms; | | |
| | intensive technology | - ability to build strong teams with low attrition; | | |
| | specialisation) | - ability to build strong processes for consistent investment performance and risk | | |
| | For AIFs: | management; | | |
| | Professional background of | - track record of having raised third party capital. | | |
| | General Partners and Principals (or | Note. These would normally be evaluated for the Fund organisation. In cases where a | | |
| | equivalent): successful investors, | new Fund is being established, these may be evaluated for the individuals forming the | | |
| | founders, managers, technologists. | new Fund. | | |
| | Skillsets: expertise, experience, | 2 DFIs / NBFCs: organisation's | | |
| | and success related to (for | - credentials | | |
| | example) | - management team and board: track record and experience | | |
| | - Managing founder teams, | - experience in RDIF Priority Sectors | | |
| | to ensure robust teams, | - project financing experience: manufacturing, working capital. | | |
| | scaled operations, and | 3. In common across AIFs, DFIs, NBFCs: | | |
| | strong returns | - Key personnel's track record related to functions such as deal-sourcing, due | | |
| | - Emerging technologies | diligence / evaluation, portfolio management, exits; | | |
| | - Product management | - Combined team (including advisory boards) for domain expertise in technologies / | | |
| | - Finance and investment | sectors; | | |
| | - Building and maintaining | 4. Where quantitative criteria are considered essential, the following may be explored: | | |
| | mentoring networks | 1. Combined number of person-years of experience in technology and investment, in | | |
| | For DFIS: organisation's | RDIF | | |
| | credentials and management team | - Priority sectors, in India | | |
| | experience. | - Technology Readiness Levels / venture development stages | | |
| | | 2. Total number of funds from which successful exits have taken place | | |
| | | 3. Internal rates of return (IRR) / distribution to paid-in capital (DPI) across | | |
| | | previous Funds: mean values; standard deviations (to verify consistent performance) | | |
| | | 4. Number of years that Fund Management Team have worked together | | |
| 2 | Demonstrated Track Record of | 1. Net Internal Rate of Return (IRR) over | | |
| | Investment Management | - last two Funds (for AIFs) or | | |
| | Competence. Success and | - the last 10 years (for DFIs / NBFCs) (annualised return of Fund to LPs) | | |
| | consistency in delivering | AND / OR | | |
| | prior | - Repeatable processes | | |
| | Funds, through | - Robust execution | | |
| | | - Effective risk management | | |
| | | 2. Multiple on Invested Capital (MOIC) over previous two Funds (for AIFs) (what | | |
| | | multiple of the invested money was actually returned) | | |
| | | AND/OR | | |
| | | 3. Distributions to Paid-In Capital (DPIC) over | | |
| | | - last two Funds (for AIFs) (realised returns – cash actually distributed to LPs) | | |
| | | - last 10 years (for DFIs / NBFCs) | | |
| | | AND/OR | | |
| | | 4. Yield on Loans or Portfolio Yield over previous two funds (for debt AIFs) (average | | |
| | | interest rate earned on the outstanding loan portfolio, measuring income generated from | | |
| | | Debt AIF's investments) | | |
| | | AND/OR | | |
| | | 5. Vintage Year Performance (AIF's performance against other funds in the same First | | |
| | | Close year) | | |
| | | AND/OR | | |
| | | 6. Default Rates or Non-Accrual Loans (for debt AIFs, DFIs, NBFCs) (percentage of | | |
| | | loans in portfolio that are unable to make repayments as scheduled - as a measure of | | |
| | | robustness of execution and risk management) | | |
| | | AND/OR | | |
| | | 7. Recovery Rates (for, DFIs, NBFCs) (percentage of the principal and accrued | | |
| | | interest amounts recovered from loans that are in default e.g. via liquidation of assets, | | |
| | | etc. - measuring robustness of SLFM's measures against downside. | | |
+-----+---------------------------------------------+-------------------------------------------------------------------------------------------------------------------------------------------+--------+-------+
| | Part B | R&D and RDI-Intensive Technology Focus: Orientation and Competence to Execute RDIF Mandate | | |
| | (RDIF may select any or more of the options listed below, as deemed fit by the Executive Council on advice of the Expert Advisory Committee.) | | |
+-----+---------------------------------------------+-------------------------------------------------------------------------------------------------------------------------------------------+--------+-------+
| 3 | Investment Thesis (which may be | Qualitatively assessed and scored, based on expert evaluation against RDIF Investment | | |
| | part of the Private Placement | Thesis criteria. Scoring would take place against | | |
| | Memorandum): alignment with | 1. Alignment with RDIF R&D / RDI-intensive technology and Priority Sectors | | |
| | RDIF Investment Thesis. | - Focusses only on R&D / RDI-intensive technology and only in RDIF | | |
| | | Priority Sectors (Score A) | | |
| | | - Focusses only on R&D / RDI-intensive technology in RDIF Priority Sectors plus | | |
| | | other Sectors (Score B) | | |
| | | - Focusses on R&D / RDI-intensive technology and other sources of value in RDIF | | |
| | | Priority Sectors plus other Sectors (Score C) | | |
| | | Based on the scale adopted by the Executive Council, the final value of A, B, and C shall | | |
| | | be decided. However, A > B > C shall be maintained. | | |
| | | 2. Technology maturity ranges specified in the RDIF Investment Thesis (TRL 4+) | | |
| | | 3. Venture development stage (laboratory spin-out to production) | | |
| 4 | Track Record in R&D Scale Up | While Indian AIFs / DFIs / NBFCs have limited experience with R&D-intensive RDI- | | |
| | and RDI-Intensive Technology | intensive technology, Fund Management teams that have achieved the following would | | |
| | Competence. Demonstrated | be highly scored: | | |
| | competence with the high- | - At least one exit from an RDI-intensive technology firm; | | |
| | uncertainty investments | AND/OR | | |
| | characterising RDI- | - This would include technology stage / maturity, advanced science | | |
| | intensive technology at | bases, 'hockey-stick' valuation | | |
| | the TRLs | growth (long low period, followed | | |
| | concerned. | by exponential increase). | | |
| | | - At least two prior investments in RDI-intensive technology firms. | | |
| 5 | Track Record in Investment Sizes | Ticket Sizes in previous Funds (for AIFs) or across the previous five years (for DFIs / | | |
| | for R&D Scale Up. Demonstrated | NBFCs): | | |
| | competence with the size of | 1. Average value across previous Funds (for AIFs) or across the previous five years (for | | |
| | investments needed to scale-up | DFIs / NBFCs): indicating general familiarity with managing investment ticket sizes in | | |
| | R&D. | the RDIF's target range; | | |
| | | 2. Modal value across previous Funds (for AIFs) or across the previous five years (for | | |
| | | DFIs / NBFCs): indicating consistent ability to manage these ticket sizes | | |
| | | 3. Trends (longitudinal) across previous two Funds (for AIFs) or across the previous | | |
| | | five years (for DFIs / NBFCs). | | |
| 6 | Absorption and Utilisation | Percentage of previous Fund committed to investees. | | |
| | Capacity. Ability to effectively | | | |
| | invest capital contributions | | | |
| | received, in companies including | | | |
| | startups. | | | |
+-----+---------------------------------------------+-------------------------------------------------------------------------------------------------------------------------------------------+--------+-------+
5. QCBS Quality Criteria for Focused Research Organisations. Focused research organisations (FROs)
are defined by a specialised focus on particular technologies, sectors, or innovation functions. In India,
they are typically attached to public academic or research institutions. Reflecting their institutional
nature and specialised functions, RDIF
5.1. Selects FRO SLFMs on the basis of nomination by EGoS, on the recommendation of the
Executive Council;
5.2. Supports such nominations with competitive quality-based selection criteria that are tailored to
the specific requirements of technology, sector, or innovation function concerned;
Except for statutory / autonomous institutions of the Government of India, which may be directly
nominated by the EGoS, on the recommendation of the Executive Council.
6. Selection Process. RDIF executes QCBS through the following process. This presumes (a) a 15-year
cycle of investment and returns, to be repeated across RDIF overall 50-year lifespan, and (b) a 6-year
commitment period from Year 1 to Year 6 of each cycle.
6.1. Step 1: Notice Inviting Applications and Bid Submission. RDIF releases Notes Inviting
Applications (NIAs) to become SLFMs from Year 1 to Year 6 of its first cycle. Following a
cohort-based approach (at a frequency to be decided by the RDIF), these are released
periodically during each financial year.
(i) NIA Formulation. The RDIF shall draft NIAs to reflect
(a) Sectors, sub-sectors, and types of projects (not specific projects by SLFMs) approved
by the EGoS, and updated in the RDIF Investment Thesis;
(b) Quality criteria as listed above;
(c) Cost criteria as listed above.
(ii) NIA Publication. RDIF must maximise awareness of its NIAs in an open and transparent
process, including via public advertisement and upload to its public digital channels.
(a) Simultaneously, the RDIF may ensure that the most competent Indian SLFMs are
available for consideration.
(b) RDIF may proactively reach out to highly-regarded AIFs, focused research
organisations (FROs), development finance institutions (DFIs), and non-banking
finance corporations (NBFCs), to encourage their application to the open NIA process
(iii) Bid Submission. Organisations interested in becoming RDIF SLFMs provide bid
documents details to the RDIF in bid documents. These shall include
(a) Due diligence information as may be specified by the RDIF, including supporting
documents (such as Indentures of Trust for the AIF Trust, Articles of Association and
Memoranda of Agreement for Investment Managers, etc.);
(b) Quality criteria template information as selected by the RDIF from the options
provided above, including supporting documents;
(c) Cost criteria template information following the specification above;
(d) Any other information as advised by the Expert Advisory Committee.
6.2. Step 2: Screening and Investment Memorandum Preparation by RDIF. The RDIF shall:
(i) Conduct a detailed verification, review, and analysis of the Bid Documents, and
all supporting material; seeking clarification or additional information where
needed from applicants;
(ii) Screen applications for basic compliance with NIA information and due diligence
requirements;
(iii) For those Bids clearing such screening: drafts Investment Memoranda
summarising key details (and seeking clarification where needed from applicants)
from the verification and review;
(iv) Provide these Investment Memoranda accompanied by supporting Bid Documents to
the Executive Council for its consideration along with the specific advice of the Expert
Advisory Committee, if any.
6.3. Step 3: Evaluation and Recommendation by the Expert Advisory Committee. The Expert
Advisory Committee may invite applicants to make presentations on their suitability for RDIF
funding.
(a) The Expert Advisory Committee evaluates and scores the suitability of applicants, and
recommend SLFMs for selection, on the basis of Cost, following broad criteria
outlined above;
(b) Quality, following broad criteria outlined above.
(ii) The Executive Director, RDIF shall document the recommendations of the Expert
Advisory Committee regarding the selection process and submit them to the Executive
Council for its consideration.
6.4. Step 4: Executive Council Recommendations. The Executive Council, after due deliberations on
the submitted proposals, may recommend a list of SLFMs to EGOS for final approval.
6.5. Step 5: EGOS Approvals. EGoS shall consider the recommendations of the Executive Council and
record its decisions and approvals accordingly.
6.6. Step 6: Provisional Letter of Intent and Contribution/Loan Agreement.
(i) To support SLFMs in raising further private capital for RDI-intensive technology
investment, the RDIF shall issue a Provisional Letter of Intent to the SLFM within a
reasonable time-period.
(ii) Upon receipt of the Contribution/ Loan Agreements executed by the SLFM with private
investors, the RDIF shall, within a reasonable time- period, finalize and execute its own
Contribution/ Loan Agreement with the SLFM.
[F. No. 01/RDI/ANRF-2025]
ARUMUGAM DHANALAKSHMI, Jt. Secy.
Uploaded by Dte. of Printing at Government of India Press, Ring Road, Mayapuri, New Delhi-110064
and Published by the Controller of Publications, Delhi-110054.