Context:

• A debate has emerged over the allocation of India's ₹1 lakh crore Deep-Tech Fund, following reports that 62% of the first funding round went to companies linked to members of the selection committee.
• While transparency and accountability are essential, an excessive focus on perceived conflicts of interest without understanding the structure of India's deep-tech ecosystem may undermine the country's technological ambitions.

Deep-Tech and Initiatives:

• Deep-Tech: If innovation is the match between problems (customer needs or opportunities) and solutions (technologies, business models etc), then deep tech is that part of the solution space based on breakthrough science and engineering (such as AI, quantum computing, biotechnology, robotics, and semiconductors).
• Fund:
  • India’s primary national initiative for deep-tech is the Research, Development and Innovation (RDI) Fund, approved by the Union Cabinet on July 1, 2025.
  • The RDI Scheme is a ₹1-lakh crore multi-year outlay administered under the Anusandhan National Research Foundation (ANRF) to catalyze private-sector research and scale deep-tech capabilities.
  • Financial instruments utilized by the framework involve long-term low-interest or zero-interest loans, direct equity support, and contributions to a dedicated Deep-Tech Fund of Funds.

Why the Controversy Arose?

• A media investigation highlighted that a majority of the first batch of selected ventures had associations with committee members, raising concerns about conflict of interest in the use of public funds.
• Though this raises the legitimate need to scrutinise public expenditure, the controversy overlooks the design and operational realities of the Deep-Tech Fund.

Understanding the Fund's Structure:

• A multi-year, multi-manager fund:
  • The ₹1 lakh crore Deep-Tech Fund is designed to be deployed over five years, not through a single funding cycle.
  • Multiple fund managers are expected to allocate resources; but only two have been appointed so far.
  • The Technology Development Board's first batch of fund disbursements represents only a small fraction of the overall programme.
• Why the first cohort appeared concentrated?
  • Applications were processed on a first-come, first-served
  • Early applicants were naturally drawn from India's existing deep-tech ecosystem, whose members were already familiar with the programme.
  • According to the Board, only 1 of 13 companies in the second cohort has links with committee members, indicating that the initial pattern was a result of sequencing rather than systematic favouritism.

Conflict of Interest - The Central Issue and Why Overlap Exists:

• India's deep-tech ecosystem remains relatively small.
• The limited number of experienced investors, scientists, mentors and entrepreneurs means that leading experts have inevitably interacted with many promising ventures through mentoring, funding or board participation.
• Consequently, complete separation between experts and applicants is difficult without sacrificing domain expertise.

Institutional Safeguards in Place:

• The system manages rather than ignores potential conflicts through several safeguards -
  • Companies founded, owned or operated by committee members are ineligible.
  • Firms in which a member holds more than 10% ownership are automatically disqualified.
  • Members must disclose interests not only in applicant firms but also in competing firms.
  • Members with conflicts are required to recuse themselves, with recusals formally recorded.
  • Funding decisions require a super-majority, reducing the influence of individual members.
  • Government support is capped at 50% of project cost, ensuring private participation.
  • Final approvals undergo an additional review by the Board of Secretaries.
• These mechanisms aim to preserve integrity while retaining specialised expertise.

Outcome-Based vs Process-Based Evaluation:

• The effectiveness of the fund should ultimately be judged by outcomes rather than perceptions.
• The more relevant questions are -
  • Were genuinely deserving deep-tech ventures financed?
  • Were capable firms unfairly excluded?
  • Did the investments strengthen India's technological capabilities?
• The governance should evaluate decision quality based on information available at the time rather than retrospective assumptions.

Potential Risks of Excessive Suspicion:

• The sensational reporting focused solely on conflict of interest may produce unintended consequences.
• For example,
  • Discouraging talented scientists and entrepreneurs from participating in government initiatives.
  • Reducing the willingness of globally reputed experts to serve on public committees.
  • Weakening investor confidence in India's emerging deep-tech ecosystem.
  • Slowing innovation through excessive procedural caution, thereby affecting India's technological competitiveness.

The Larger Policy Questions:

• Instead of focusing exclusively on governance controversies, the greater attention should be paid to structural challenges such as -
  • Availability of follow-on capital for scaling deep-tech ventures.
  • Development of larger venture funds for strategic technologies.
  • Creation of sovereign or strategic innovation funds through monetisation of public assets.
  • Strengthening India's long-term financing ecosystem for emerging technologies.
• These issues will determine whether India can build globally competitive deep-tech industries.

Balancing Accountability with Innovation:

• The media scrutiny should not be rejected, rather, informed oversight must distinguish between genuine malpractice and unavoidable ecosystem characteristics.
• In a democracy, accountability remains indispensable, but excessive suspicion can create policy paralysis, discourage expert participation and weaken strategic national initiatives.
• The challenge is to maintain robust governance without undermining innovation, particularly in sectors critical to technological self-reliance, economic security and global competitiveness.

Conclusion:

• India's deep-tech ambitions require both institutional integrity and risk-tolerant innovation financing.
• The challenge for policymakers is to design governance frameworks that ensure transparency while enabling experts to accelerate technological advancement rather than deterring them through excessive procedural caution.