Rs 20,000 crore allocated to DST to kickstart Rs 1 lakh crore research and development fund

Signalling a commitment to research and development, Union Finance Minister Nirmala Sitharaman on Saturday allocated Rs 20,000 crore to the Department of Science and Technology as a corpus for a fund to promote private sector-driven innovation.

Sitharaman had announced setting up of a Rs 1 lakh crore research and development fund in the budget last July.

The allocation in Saturday's budget will kickstart the fund aimed at supporting research and development in deep tech and sunrise sectors.

"To implement the private sector-driven Research, Development and Innovation initiative announced in the July budget, I am now allocating Rs 20,000 crore," Sitharaman said.

Presenting the Union Budget for the 2025-26 fiscal, the finance minister also said a Deep Tech Fund of Funds would be explored to catalyse the next generation start-ups as part of this initiative.

"The allocation this year will kickstart the fund and be a major boost to support research and development in the private sector in deep tech and sunrise sectors.

This will be a major step towards creating strategic autonomy in some key technology sectors," said Abhay Karandikar, secretary in the Department of Science and Technology.

The government had decided to step in to nudge the private sector to take up research and development, which had not picked up despite tax exemptions for the purpose.

The Economic Survey, presented in Parliament on Friday, had flagged concerns over the private sector's disinterest to spend on research and development.

Addressing a press conference on Friday, Chief Economic Advisor V Anantha Nageswaran said the private sector's expenditure on research and development was very low despite a lot of incentive schemes provided by the government.

The government contributes 50 per cent of the total research and development spending in the country whereas the business enterprises' spending accounts for only 41 per cent, he added.

Nageswaran also raised concerns regarding sector-centred investments on research and development by the private sector.

He said research and development was one area where the private sector should make improvements.

With the Department of Science and Technology being the nodal ministry driving this fund, its budgetary allocation witnessed a sharp increase from Rs 8,029 crore to Rs 28,508.90 crore.

The Department of Biotechnology has been allocated Rs 3,446.64 crore, a hike of Rs 1,170.94 crore over the budgetary allocation of Rs 2,275.70 crore in the July budget.

The Department of Scientific and Industrial Research has received an allocation of Rs 6,657.78 crore against Rs 6,323.41 crore in the 2024-25 fiscal.

The Department of Atomic Energy has received an allocation of Rs 24,049.10 crore against Rs 24,968.98 crore.

The Department of Space has been allocated Rs 13,416.2 crore, up from Rs 13,042.75 crore.

The budget has allocated Rs 10,230.2 crore to various Indian Space Research Organisation (ISRO) centres such as the Vikram Sarabhai Space Centre, UR Rao Satellite Centre, the Human Spaceflight Centre and various projects, including launch vehicle development.

Space applications received the second-largest share with Rs 1,706.8 crore, supporting centres such as the Space Applications Centre, Development and Educational Communication Unit, and the National Remote Sensing Centre.