India has historically been a capital-deficient nation, with limited investment in R&D from both the government and private corporations. To achieve the goal of becoming a $10 trillion economy, India cannot remain merely a consumer of technologies developed abroad. It must invest in developing indigenous advanced technologies that form the foundation of future economic growth. Strengthening domestic R&D capabilities is not only an economic imperative but also vital for strategic autonomy. Without such capabilities, India risks vulnerability to external pressures, as seen in recent shifts in U.S. trade and technology policies.
India needs to significantly increase its investment in R&D across all levels. This, however, is easier said than done. As highlighted by the Prime Minister in his Independence Day speech, Indian companies remain more comfortable leveraging labor arbitrage and serving international corporations, particularly those based in the United States, rather than pursuing original innovation. Encouraging private sector participation in high-risk, moonshot projects is structurally challenging due to deep-rooted risk aversion. Moreover, schemes such as Production Linked Incentives (PLI), which are well-suited for scaling manufacturing, are ineffective in the realm of advanced technologies. This is because many such projects may not yield tangible or commercial outcomes in the short term. Therefore, it becomes essential for the Government of India to step in and establish a dedicated R&D fund to drive breakthroughs in advanced technologies.
What is the objective of this fund, and what are comparable models globally?
The primary objective of this fund is to provide grants to Indian-owned private companies and startups to drive breakthrough innovation. Each year, the fund’s management should identify priority sectors and issue calls for proposals. At the end of the application cycle, multiple teams or companies should be selected to pursue multi-year projects, ensuring that for any given challenge, several groups (typically 3–4) work in parallel. This competitive, multi-team approach increases the chances of success, accelerates innovation, and prevents overreliance on a single solution.
A comparable model exists in the United States under the Department of Defense, known as the Defense Advanced Research Projects Agency (DARPA). While DARPA has traditionally focused on advancing military technologies, it has also been the origin of transformative civilian innovations such as the internet, GPS, and autonomous vehicles. India can adapt this model to create a fund that emphasizes strategic civilian R&D, tailored to its economic and societal priorities.https://www.darpa.mil/about#mission
How will the fund be administered, and who will provide oversight?
The fund’s management team should represent a strong public–private partnership, bringing together venture capitalists, startup CEOs, and scientists from leading government research institutions. The fund should be led by an individual with deep expertise in risk management and innovation financing, ensuring that high-risk, high-reward projects receive balanced evaluation. To ensure agility and responsiveness, the fund must operate outside traditional bureaucratic structures while remaining aligned with national priorities.
India already has successful precedents of such leadership, most notably the UIDAI, which was effectively steered by a non-government head. To provide authority, coordination, and accountability at the highest level, the fund should be directly constituted under the Prime Minister’s Office (PMO).
Where will the funding come from?
Ideally, funding for such a fund should come directly from the Central Government’s budget. My proposal is for an annual outlay of at least USD 3 billion (₹25,000 crore). Given the current fiscal situation, such an allocation is both feasible and manageable. While India’s immediate priorities remain social welfare, strategic investment in advanced technologies is ultimately complementary, as it strengthens long-term economic growth, job creation, and national resilience.
In the event that the government is unable to commit the full outlay, additional funding can be mobilized through private markets. One option is to establish the fund as a publicly backed venture capital vehicle, structured on mutual fund principles, in which citizens and institutional investors can purchase units. This approach would democratize participation in India’s innovation economy while ensuring professional fund management. To safeguard investors and provide confidence, the government could serve as a backstop or guarantor for the capital invested.
Which areas should the fund prioritize?
Artificial Intelligence - India must invest in developing its own foundational AI models (comparable to GPT, Gemini, and others). Current global models are predominantly trained on Western data sources, which often reflect perspectives and biases that do not align with India’s cultural, social, and strategic interests. Over the next 5–10 years, such models are likely to become authoritative sources of information across domains, shaping public discourse, policymaking, and even international narratives. A nation of 1.4 billion people cannot afford to rely solely on foreign or Chinese-developed models to define its knowledge ecosystem.
Foundational models carry an influence far greater than that of earlier social media platforms such as Facebook, Instagram, or X, as they directly shape information, reasoning, and decision-making. Their susceptibility to manipulation by external actors poses significant risks to India’s sovereignty and global standing. Developing indigenous foundational models is therefore not just a technological ambition but a strategic necessity. However, this is a highly capital-intensive endeavor that requires sustained, large-scale funding support—precisely the kind of investment this proposed fund can provide.
Urban Planning - India’s cities are facing mounting challenges due to rapid urbanization, inadequate infrastructure, and fragmented governance. Local governments often lack sufficient expertise in areas such as urban planning, traffic engineering, and infrastructure management, while responsibilities remain scattered across multiple agencies with limited coordination.
This fund can support private entities, research organizations, and startups to develop advanced models for urban systems. Potential areas include traffic flow optimization in large metropolitan regions, predictive modeling of city drainage and flood management systems, and data-driven recommendations for land use and infrastructure planning. By funding such projects, India can build a pipeline of scalable, technology-enabled solutions that strengthen the capacity of urban local bodies and improve the quality of life in cities.
Semiconductor Chip Design - While India’s Production Linked Incentive (PLI) schemes are helping establish semiconductor fabrication units, long-term technological leadership requires parallel investment in chip design. Designing advanced semiconductors—particularly processors, GPUs, and AI accelerators—is central to powering the next generation of computing, telecommunications, and artificial intelligence. Recent export restrictions imposed by the United States on advanced chips to China, and broader controls on AI chip access globally, underscore the strategic vulnerability of countries lacking indigenous design capabilities.
India already possesses a strong foundation for building a chip design ecosystem: a large pool of highly skilled engineers in semiconductor design, decades of experience in VLSI and embedded systems, and a growing community of startups in AI hardware. This fund can accelerate these capabilities by supporting startups and research teams focused on cutting-edge chip architectures tailored to India’s economic, defense, and AI ambitions, thereby strengthening digital sovereignty and global competitiveness.
Advanced Materials Research :- India’s ambitions in aerospace, defense, clean energy, and next-generation manufacturing depend heavily on breakthroughs in advanced materials. Whether building indigenous jet engines, developing stealth aircraft, or advancing renewable energy technologies, high-performance composites, alloys, ceramics, and nanomaterials are critical.
India has a strong foundation in materials research through institutions like DRDO, ISRO, CSIR labs, and premier academic centers such as IITs, which have historically contributed to defense and space programs. However, translating this research into scalable commercial applications requires dedicated support for startups and private research initiatives. Funding innovation in advanced materials can enable solutions across electric vehicles (lightweight, high-density batteries), biomedical devices (biocompatible materials), aerospace (heat-resistant composites), and space exploration, while simultaneously reducing import dependence and strengthening India’s strategic edge.
In summary, establishing a dedicated Advanced Technology Fund is critical for India’s economic growth, technological sovereignty, and global competitiveness. By providing sustained funding to private companies, startups, and research institutions in areas such as foundational AI models, semiconductor design, advanced materials, and urban planning, India can accelerate innovation while reducing reliance on foreign technologies. Managed through a public–private partnership model under the PMO, with clear governance and strategic oversight, this fund will catalyze high-risk, high-reward projects that are otherwise too uncertain for traditional private investment. By investing today, India positions itself to lead in critical technologies of the future, strengthen national security, and create a robust innovation ecosystem that benefits society, industry, and the nation as a whole.