Rewiring public procurement for innovation

The recently launched ₹1 trillion Research, Development and Innovation (RDI) Scheme signals a historic shift in India's innovation policy.

- AJAY KUMAR

For the first time, private sector innovation is at the centre, with funds channelled through a special-purpose fund and deployed by professional managers via concessional loans, equity, and a fund-of-funds structure.

Until now, R&D spending largely flowed to public institutions, which laid the nation's scientific foundations. The new approach taps the innovative energy of over a billion people—far beyond a few thousand government scientists—ushering in a 3S revolution: Scale, Speed, and Spend.

Scale comes from opening R&D to startups, industry, academia, and individuals, bringing unmatched breadth. Speed flows from the private sector's push for market-ready, time-bound solutions. Spend is unlocked by private co-investment and fund-of-funds participation, addressing chronic capital shortages. This transition is set to broaden participation, accelerate breakthroughs, and power transformative technological growth.

For RDI to deliver fully, it must be backed by reforms in public procurement to actively support locally developed products. A dedicated policy tool is vital because innovations rarely fit traditional norms like multiple bidders or prior procurement history. With government purchases making up nearly 20 per cent of India's gross domestic product, the state wields enormous power to shape markets and drive innovation. As an early adopter, it can validate new technologies, build consumer confidence, provide steady revenues, and reduce the risks innovators face in bringing novel products to market.