Trust is key, tech fund needs more guardrails

The government’sfund to spur research and development in deep-tech sectorslike AI, space and quantum technology is commendable. Private sector R&D spending has been paltry and the country risks falling behind in the tech race without stable, patient, long-term funding of the kind ordinary venture capital is unwilling to provide. But the intersection of public money and private networks is tricky terrain because taxpayers, not shareholders, bear the risk. The process should inspire confidence that there’s a level playing field for all. That’s why the questions raised by an investigation in this paper into the Research, Development and Innovation Fund matter. In its first round, the fund approved Rs 2,192 crore in soft loans to 22 private firms, chosen by a 12-member panel — 11 from private equity and technology, and one non-voting government representative. Drawing experts from the private sector is sound design, they are best placed to sift genuine tech from a pitch deck. But when 15 of the 22 selected firms have investment ties to seven of those very panel members, and nine trace back to the committee’s own chairman, the arithmetic of the process becomes as important as its intent. The official response rests on three pillars: disclosure, recusal, and the claim that decisions were taken purely on merit by unconflicted members. Indeed, officials have pointed out that in the fund’s second cohort, only one of 13 companies had a panel-member link — evidence, they argue, that the first round’s concentration reflected early-mover awareness among well-networked founders, not favouritism. These are valid points. Disclosure and recusal are standard tools for managing conflict in any expert body, and a young, capital-starved sector will always draw its evaluators from among the very people who have been investing in it. But good intentions are not structural safety. Recusal only guards against a member voting on a company they are invested in; it does nothing about the informational and reputational advantage of sitting on the panel in the first place, or about the pull that draws founders towards investors who also sit on committees controlling access to public capital. In an economy where ownership and capital are already visibly concentrated across sectors, a public fund for deep-tech — where costs are high, credible ventures are few, and information is scarce — cannot rest its defence on the good faith of its selectors alone. The remedy is not to purge private-sector expertise from the process, that would defeat the fund’s purpose. It is to balance the instincts of innovation with the discipline of compliance; widen and rotate the selectors’ pool so that no single network’s judgement carries disproportionate weight; bring in outside academic and scientific evaluators for initial screening; separate technical assessment from financial interest; publish conflict disclosures and recusal records as mandated practice, not as answers obtained in Parliament. Venture-capital speed and public accountability will pull in different directions. But a fund built on public money must earn trust in its architecture, not just assert it.