Budget 2024: FM Sitharaman announces large fund to support R&D, deep tech

The move to provide 50-year interest-free loans to young tech entrepreneurs is “a forward-looking initiative that signals the government's commitment to nurturing a robust technology ecosystem Image: Shutterstock

Finance Minister Nirmala Sitharaman on February 1 announced a plan to set up a large corpus dedicated to boosting R&D and innovation in private industry, alongside a separate scheme to support deeptech ventures—a move that was welcomed by the country’s tech startups.

“Innovation is the foundation of development,” Sitharaman said, presenting the government’s interim budget ahead of the national elections. “For our tech-savvy youth, this will be a golden era. A corpus of Rs100,000 crore will be established with 50-year interest-free loan provided. The corpus will provide long-term financing or refinancing with long tenors. This will encourage the private sector to scale up research and innovation significantly in sunrise domains.”

The move to provide 50-year interest-free loans to young tech entrepreneurs is “a forward-looking initiative that signals the government's commitment to nurturing a robust technology ecosystem”, Edul Patel, co-founder and CEO of Mudrex, a crypto investing platform provider, said in an email.

The new fund “is a crucial move and a strategic step to fortify the growth of private sector R&D”, Rohit Chouhan, CEO of Nabhdrishti Aerospace, said in an email.

Developing cutting-edge technologies for defence demands needs a lot of money upfront, and entails a protracted gestation period, Chouhan notes.

“The scarcity of capital particularly hampers the prospects of startups and small enterprises, hindering their ability to compete with formidable global entities,” he said. Therefore, the long-term low-interest loans will help make local defence startups and businesses more resilient and competitive, he added.

Nilaya Varma, co-founder and CEO of Primus Partners, a consultancy, said this fund is “most welcome, and critical for India to drive intellectual property-based growth, which is the future”.

Also read: Budget 2024: What India's tech startups want

This fund, combined with Atmanirbharta (self-reliance) for India’s fledgling defence industrial complex and quality of education at premier colleges, will help India become a research and product nation, Varma added.

In her budget speech, Sitharaman noted that opportunities for India at the global level are expanding, adding that “a new scheme will be launched for strengthening deeptech technologies for defence purposes and expediting Atmanirbhartha”.

In 2023, the government announced India’s first national deeptech startup policy, which identified nine areas in which it would make interventions to help ventures trying to commercialise products based on serious scientific research and engineering, and build the overall deeptech ecosystem in the country.

“Deeptech is the foundation of society. Without that you’ve got a hollow society,” GS Madhusudan, co-founder and CEO of Incore Semiconductors, incubated at the Indian Institute of Technology-Madras, said in a recent interview.

In the area of semiconductors, Incore is working to develop intellectual property on chip design for applications ranging from embedded systems—that go into everyday appliances—all the way to high-performance computing, that all resides within India.

“For a civilisation of 1.4 billion people to have a stable society, it has to be self-sufficient” in critical technological areas, Madhusudan added.