Public Money, Private Networks: Govt’s New Deep-Tech Fund Gives Most Of INR 2,192 Crore To Companies Linked To Its Own Selection Panel
In the first disbursement from India’s ambitious ₹1-lakh-crore Research, Development and Innovation (RDI) Fund, the government cleared ₹2,192 crore in soft loans to 22 private companies working on space systems, energy storage, semiconductors, robotics and related deep-tech domains. 15 of those 22 firms, accounting for more than ₹1,377 crore, or roughly 62 per cent of the money, have investment ties to seven members of the very panel that selected them. Nine of the companies are linked to the chairman of the selection committee. One of them carries a personal equity stake held by that chairman. This is not a minor procedural footnote. It is a structural failure in the architecture of public risk capital, and it demands more than reassurance.
The episode matters because the RDI Fund is not ordinary venture money. It is designed as long-term, low-cost, collateral-free public financing for technologies the market alone will not adequately fund. When the gatekeepers of that capital sit inside the same investment networks that stand to benefit, the claim of pure merit becomes difficult to sustain in the public eye. Optics, as one parliamentarian correctly noted, are not a secondary concern when taxpayer money is at stake. They are part of the legitimacy of the entire enterprise.
Timeline of a Predictable Collision
The RDI Fund was launched in November 2025 with the explicit aim of accelerating private-sector deep-tech research in priority areas including artificial intelligence, quantum technologies, space, defence, robotics, clean energy, semiconductors and digital healthcare. Implementation was entrusted to two existing bodies under the Ministry of Science and Technology: the Technology Development Board (TDB) and the Biotechnology Industry Research Assistance Council (BIRAC). TDB constituted a 12-member Investment Committee — 11 private-sector professionals drawn from technology and private equity, plus a non-voting government representative — to evaluate applications and recommend funding.
In the first round, 124 applications were received. Twenty-two companies were cleared for a total of ₹2,192 crore. On 30 July 2026, responding to a parliamentary question by Congress Rajya Sabha MP Praveen Chakravarty, Science and Technology Minister Jitendra Singh placed on record the names of seven committee members who had disclosed financial interests in companies selected for funding. The following day the Department of Science and Technology asserted that selections were made “purely on merit” and that conflicted members had “zero involvement” in the evaluation or sanction of the relevant proposals.
On 7 August 2026, The Indian Express published its investigation detailing the specific links, drawing on Registrar of Companies filings, company websites and the parliamentary record. The same day, TDB Secretary Rajesh Pathak described conflict of interest as “unavoidable” in such panels and insisted it could be managed through disclosure and recusal. The government later stated that in the second cohort of 13 companies, only one had a member stake, framing the first-round concentration as a function of early awareness among networked firms rather than systemic bias.
Official Claims Versus Documented Reality
The official defence rests on three pillars: prior disclosure of interests, mandatory recusal from conflicted decisions, and the assertion that remaining members decided purely on technical and commercial merit. Committee members have uniformly insisted they followed the rules. Saurabh Srivastava, the panel chairman and co-founder of the Indian Angel Network, stated that conflicts are expected when industry experts are involved and that recusal is recorded. Other members — including those linked to Tata Group entities, TVS Capital, Persistent Systems and individual angel investments — offered similar statements emphasising transparency and process.
The documented reality is more troubling. 15 of the 22 selected companies have ties to the 7 members. The volume of capital concentrated in those companies is not marginal; it exceeds ₹1,377 crore. Srivastava alone is linked to 9 recipients, including a personal 0.75 per cent stake in Noccarc Robotics (₹11.41 crore approved). Other links include preference shares, fund holdings through Vistra ITCL as trustee for IAN vehicles, directorships, and prior executive roles. Tejas Networks (₹250 crore), Ather Energy (₹211.89 crore), Agnikul Cosmos (₹200 crore), Manastu Space (₹116 crore), Dhruva Space (₹105 crore) and several others appear repeatedly in the overlap.
Recusal, while necessary, does not eliminate the problem. A panel whose members collectively sit inside the same investment ecosystem inevitably brings shared assumptions, shared deal flow and shared networks to the table. When the chairman’s network is linked to 9 of the 22 winners, the claim that residual members operated in complete isolation from those networks strains credibility. The second-cohort improvement, only one linked firm among 13, may reflect learning or simply different timing; it does not erase the first-round concentration or the structural design flaw that produced it.
Procedural and Substantive Failures
The procedural safeguards, disclosure and recusal, are the minimum standard applied in private investment committees. They are not sufficient for the allocation of large volumes of public money intended as strategic public goods. Public capital requires a higher threshold of independence because the principal is the taxpayer, not a limited partner who can exit. The current design imports private-market norms into a public-purpose vehicle without adequate adaptation.
Substantively, the selection process appears to have privileged firms already embedded in elite investment networks. That is unsurprising: deep-tech companies that have already raised from sophisticated angels and funds are more likely to present polished applications and stronger commercial narratives. Yet the purpose of a public deep-tech fund is precisely to expand the frontier beyond those already well-connected. When 62 % of the first tranche flows to networked firms, the fund risks becoming an amplifier of existing capital rather than a corrective to market failure.
The government’s response that conflict is “unavoidable” is both accurate and inadequate. Expertise and independence are in tension; the solution is not to declare the tension inevitable and proceed with disclosure alone. It is to redesign the panel so that technical and scientific evaluation is separated from financial and commercial assessment, and so that those who hold ongoing investment stakes are not the primary decision-makers on public disbursements.
Industry Incentives and Commercial Reality
The incentives at work are straightforward. Members of the Investment Committee are successful investors and industry leaders. Their professional standing and future deal flow benefit from association with companies that receive large, patient, low-cost public capital. Even with formal recusal, the selection of a portfolio company by a public fund validates that company, improves its subsequent fundraising prospects, and enhances the reputation of the networks that backed it earlier. Soft loans at concessional rates further de-risk private capital that is already invested or may invest later.
This is not conspiracy; it is ordinary commercial logic operating inside a public process. The same logic explains why many of the selected firms are established players rather than pure early-stage bets. Public money at scale tends to flow toward entities that look bankable. The risk is that the RDI Fund, intended to crowd in private capital for hard technologies, instead subsidises the existing portfolio preferences of a relatively small circle of investors and executives.
Long-standing practice in India’s innovation funding ecosystem has normalised the presence of active investors on evaluation panels. That practice may have been tolerable at smaller scales. At the scale of a ₹1-lakh-crore corpus, it becomes a governance liability. The private sector’s expertise is essential; its commercial interests must be more rigorously ring-fenced.
Public Impact and Precedents
The immediate public impact is erosion of trust. When a large share of first-round capital is shown to have flowed to firms linked to the selectors, citizens and Parliament are entitled to ask whether the process maximised public return or simply reinforced private networks. Deep-tech funding is already opaque to most taxpayers. Concentrated outcomes of this kind make the opacity feel self-serving.
Precedents exist across public funding mechanisms in India and elsewhere. Conflict-of-interest controversies in research grants, defence offsets, and infrastructure project awards have repeatedly shown that disclosure-plus-recusal is a weak safeguard when the same individuals or networks reappear on both sides of the table. International practice in public innovation funds increasingly emphasises independent scientific review boards, cooling-off periods, and strict limits on active investors serving as decision-makers. India’s RDI Fund has not yet adopted that stricter standard.
The second cohort’s cleaner profile is welcome but insufficient. Without structural change, the same networks will continue to dominate awareness, application quality and informal signalling. Early movers with panel connections will retain an advantage that pure technical merit alone cannot fully offset.
What Must Change — and Why Half-Measures Will Fail
Four concrete reforms are required.
First, the Investment Committee should be reconstituted so that active private investors and executives with ongoing portfolio exposure are barred from voting membership. Technical and scientific experts, academics, and former industry leaders without current investment stakes should form the core. Commercial due diligence can be obtained from external, non-voting advisers.
Second, all conflict disclosures, recusal records and voting patterns should be published in summary form after each round. Transparency after the fact is the minimum price of using public money at this scale.
Third, a clear cooling-off rule should apply: any firm in which a committee member held a material interest within a defined prior period should face heightened scrutiny or automatic exclusion from that member’s cohort.
Fourth, the government must commission an independent process audit of the first two rounds, focused not on individual integrity but on whether the design systematically favoured networked applicants. The findings should inform binding changes to the fund’s governance charter.
The RDI Fund is a necessary instrument. India needs patient public capital for technologies that private markets underfund. That necessity does not justify weak institutional design. When 62 per cent of the first major tranche lands with companies linked to the selectors, the system has already signalled that disclosure and recusal are being asked to carry more weight than they can bear.
Public money is not private equity. The standards that govern its allocation must be visibly stricter, not merely equivalent to those used inside closed investment partnerships. Until the architecture reflects that distinction, every subsequent tranche will carry the same question mark that now hangs over the first ₹2,192 crore. The companies selected may well be strong. The process that selected them is not yet strong enough to command public confidence. That gap is the real story, and it will not close by insisting that conflict is unavoidable. It will close only when the rules make concentrated private benefit from public selection far harder to achieve.
