TDB pauses intake to the ₹1 lakh crore RDI fund as government insists there is no shortage of money

India's flagship ₹1 lakh crore fund for private research and deep tech has hit its first public bump. The Technology Development Board (TDB), one of the fund's managers, closed its call for proposals under the Research, Development and Innovation (RDI) scheme at 5 pm on 30 September 2026, citing "administrative reasons." Within a day the Ministry of Science and Technology was insisting there is "absolutely no shortage of funds" — a rebuttal to reports that the pause was caused by a capital crunch.

For deep-tech founders who have been counting on RDI money, the episode raises a practical question: when, and how fast, will the country's biggest R&D financing instrument actually deliver?

How the RDI fund works

The RDI scheme was set up to push private-sector investment into research and late-stage technology development, an area where India has historically lagged. It has a two-tier structure:

• First-level fund manager: the Anusandhan National Research Foundation (ANRF), which holds the corpus.
• Second-level fund managers (SLFMs): entities that actually evaluate proposals and deploy money to companies. TDB and BIRAC (for biotech) are the two named so far.

Funding is designed to crowd in private capital rather than replace it. TDB, for instance, releases money only to match what a company has raised from non-government sources. The 2026-27 Union Budget added ₹20,000 crore to the fund, and in May 2026 the first RDI cheques reached a handful of deep-tech start-ups.

TDB opened its call on 4 February 2026, and demand has been strong.

The pause and the dispute

On 30 September, Business Standard reported that TDB had stopped accepting applications amid capital constraints. Citing a source in the Department of Science and Technology (DST), it said the money TDB had received from ANRF "is not sufficient to fund the proposals coming through," and that TDB had been given an extra ₹1,000 crore, taking its sanctioned allocation to ₹3,000 crore. Outlook Business ran with the headline that the deep-tech funding push had hit pause as the corpus ran short.

The ministry pushed back on 1 October. According to its statement, carried by IANS and other outlets:

• TDB received close to 330 proposals between 4 February and 30 September 2026.
• It has evaluated the 99 projects received in February and March and selected 35 of them — 22 in the first cohort and 13 in the second.
• Proposals received in April and May are still under evaluation, and the Investment Committee meets weekly.
• TDB sought ₹500 crore for a six-month disbursement window and was allocated ₹490 crore.
• As of 30 September it had disbursed ₹375.69 crore to 10 of the 22 first-cohort companies, leaving about ₹114 crore undisbursed.

The ministry said the call would "reopen shortly after assessment of all projects received till 30th Sept," and that DST and ANRF are "in the process of assigning several other second-level fund managers (SLFMs) also in the very near future."

Reading between the numbers

Both accounts can be partly true. The ministry's figures suggest money is not the immediate constraint — TDB had not even spent its current allocation. But they also reveal a large evaluation backlog: roughly 230 proposals from April onwards were still in the queue when the call was closed. Separately, TDB Secretary Rajesh Kumar Pathak has been quoted as saying nearly 400 proposals are under review, a figure that does not match the ministry's count.

The deeper issue is capacity. With only two SLFMs operating, the scheme's throughput depends heavily on TDB's small investment team. DST had earlier indicated that fund managers would be selected by April-May 2026, with investing beginning six to eight months later; applications from venture funds to become SLFMs closed on 31 January. That timeline has slipped, leaving TDB to absorb most of the demand.

There is also a structural point. A matching model is prudent — it ensures public money follows private conviction — but it means disbursement can only move as fast as companies close their own rounds and as fast as evaluators can verify them.

Why it matters for India's deep-tech ambitions

The RDI fund is central to India's attempt to close its research-funding gap. India spends well under 1% of GDP on R&D, and the private sector's share is low compared with leading innovation economies. Deep-tech companies — in semiconductors, space, quantum, advanced materials, clean energy and biotech — face long development cycles and capital needs that conventional venture capital often will not meet on its own.

That is why the stakes of execution are high. Founders plan hiring, prototypes and fundraising around expected grant or loan support; a pause, even a temporary and administrative one, ripples through those plans. Investors watching India's broader $25-billion-scale ambition for deep tech will also look closely at whether the plumbing can move money as quickly as the headlines promise.

The positive reading is that demand is clearly there. Hundreds of companies have applied in eight months, and 35 have already been selected. If the government follows through on appointing more SLFMs — particularly venture funds with sector expertise — the scheme could scale its evaluation capacity substantially.

What to watch

• Reopening date for TDB's call and whether the backlog is cleared quickly.
• New SLFM appointments and which fund managers are chosen.
• Disbursement pace to the remaining first-cohort companies and the second cohort.
• Clearer reporting on proposals received, evaluated and funded, which would help settle disputes like this one.

For now, the government's message is that the money is there. The test is whether it can reach labs and factories at the speed deep tech needs.

Sources

• https://www.business-standard.com/technology/tech-news/tdb-pauses-accepting-applications-under-rdi-fund-amid-capital-constraints-126093001270_1.html
• https://www.outlookbusiness.com/news/deep-tech-funding-push-hits-pause-as-1-lakh-cr-rdi-corpus-runs-short
• https://theprint.in/india/technology-development-board-to-pause-invitations-for-rdi-fund-after-september/3057867/
• https://ianslive.in/govt-says-there-is-no-shortage-of-funds-for-rdi-scheme--20261001141203
• https://www.thehansindia.com/business/govt-says-there-is-no-shortage-of-funds-for-rdi-scheme-1127612
• https://swarajyamag.com/amp/story/business/absolutely-no-funding-shortage-tdb-says-research-development-and-innovation-scheme-proposal-call-closure-was-administrative
• https://www.business-standard.com/industry/news/rdi-fund-s-second-level-fund-managers-being-appointed-jitendra-singh-126091001274_1.html