Union Budget 2024: ‘Anusandhan Fund’ gets Rs 1 lakh crore boost to propel R&D, Rs 1,000 crore ‘VC Fund’ to boost space economy 

Finance Minister Nirmala Sitharaman on July 23 announced measures to boost research and innovation in India in Union Budget 2024-25, presented during the Budget Session of Parliament.

A central feature of the budget in the area is the establishment of the Powering Innovation, Research & Development (R&D) Anusandhan National Research Fund. This fund is aimed at supporting basic research and prototype development, with a substantial financing pool of Rs 1 lakh crore dedicated to spurring private sector-driven research and innovation on a commercial scale, said the finance minister in her seventh consecutive Union Budget.

Indicating that the investment in R&D for long-term benefits is crucial, a 2021 report by the McKinsey Global Institute estimated that increased investment in R&D could lead to $3 trillion in annual cost savings for the global healthcare system by 2040.

India is already the third-largest producer of pharmaceuticals by volume and has a strong track record of generic drug manufacturing. However, the country lags behind in innovative drug discovery. Increased R&D investment could help India become a global leader in this area, according to Invest India, 2023.

“This recognises the growing need for a deep tech economy. However, alongside the R&D Fund, the government should look at the Intellectual Property regime. The much overdue Patent Policy needs to come out soon to enable maximisation of the R&D Fund,” said Bhaskar Majumdar, Managing Partner, Unicorn India Ventures.

The financial minister also announced a dedicated venture capital fund worth Rs 1,000 crore with the aim of multiplying the country’s space economy by five times over the next decade. This target is aligned with the increasing relevance of space technology and its potential to contribute significantly to national and global economies. The fund is expected to attract substantial private investments, encourage entrepreneurial ventures, and advance India’s position in the competitive space industry, experts have said.

“The government’s announcement of a Rs 1,000 crore venture capital fund to boost the space economy and a Rs 1 lakh crore R&D fund recognises that the space economy will be at the forefront of India’s ascent in the deep tech economy,” said Anirudh A Damani, Managing Partner, Artha Venture Fund.

“This initiative highlights the success of ventures like Agnikul and provides momentum to their plans to launch a rocket a week and dominate the global nanosatellite delivery market,” he said.

According to the Union government, estimates suggest the current size of the Indian space economy is around $8.4 billion as of 2023. This represents roughly 2-3 percent of the global space economy.

“The Rs 1,000 crore fund of funds for space tech shows India’s capability in coming up with breakthrough solutions at low cost. This will help space tech companies look for much-needed early-stage capital to get started. This will help mobilise over Rs 4,000 crore,” said Anil Joshi, Managing Partner, Unicorn India Ventures.