Electronics Development Fund – A boost for innovation ecosystem  

EDF, which has drawn a total of ₹216.33 crore from its contributors, including ₹210.33 crore from MeitY, has made remarkable progress in nurturing India’s innovation ecosystem.

India’s electronics sector has undergone a significant transformation following a series of government initiatives and industry reforms in recent years. The country is steadily emerging as a global hub for electronics design and manufacturing, a sector marked by rapid technological change and innovation. The supported startups are involved in advanced fields such as the Internet of Things (IoT), robotics, drones, autonomous vehicles, health technology, cybersecurity, and artificial intelligence and machine learning. This involvement is helping establish India as a hub for technological innovation.

The government launched the Electronics Development Fund (EDF) on 15 February 2016 to strengthen this momentum and nurture a robust innovation ecosystem. The fund aims to promote research, development, and entrepreneurship in electronics, nano-electronics, and information technology sectors.

The EDF functions as a Fund of Funds, designed to invest in professionally managed Daughter Funds such as early-stage angel and venture funds. These Daughter Funds, in turn, provided risk capital to startups and companies developing new technologies. By doing so, the EDF played a crucial role in building a self-sustaining electronics ecosystem that encourages innovation, product design, and intellectual property creation within the country.

EDF aims to create a strong foundation for innovation and research in India’s electronics and information technology sectors and focuses on strengthening the ecosystem by supporting funds that provide risk capital to startups and companies engaged in developing cutting-edge technologies. The fund operates through a flexible and professionally managed structure designed to promote efficient investment and innovation in the electronics and IT sectors. Its framework ensures transparency, market responsiveness, and strategic allocation of funds. EDF participates in Daughter Funds on a non-exclusive basis, allowing wider collaboration and participation across the industry. The share of EDF in a Daughter Fund’s total corpus is determined by market requirements and the capacity of the investment manager to administer the fund in accordance with EDF’s policy guidelines. It generally maintains a minority participation in each Daughter Fund, encouraging greater private investment and professional fund management.

Investment managers of these funds are given flexibility and autonomy to raise corpus, make investments, and monitor portfolio performance. The funds ensure comprehensive sectoral coverage as they cover the entire value chain of electronics, information technology, and related ecosystems. The selection of Daughter Funds is finalised after thorough due diligence by the Investment Manager.

Each Daughter Fund supported under the scheme must be registered in India and comply with all applicable laws and regulations, including the SEBI (Alternative Investment Funds) Regulations, 2012, as Category I or Category II AIFs. This ensures that all participating funds operate within a well-defined regulatory framework while aligning with EDF’s broader goal of fostering research, entrepreneurship, and technological advancement.

Key objectives

• Promote Innovation and R&D: To foster research and development in electronics, nano-electronics, and information technology by supporting market-driven and industry-led innovation.
• Support Daughter Funds: To invest in professionally managed Daughter Funds such as early-stage angel and venture funds that, in turn, provide capital to startups and technology ventures.
• Encourage product and technology development: To nurture entrepreneurship by supporting companies involved in the creation of new products, processes, and technologies within the country.
• Strengthen domestic design capabilities: To enhance India’s capacity for indigenous design and development in the Electronics System Design and Manufacturing (ESDM) sector.
• Build a national IP resource pool: To generate a strong base of intellectual property in key technology areas and encourage ownership of innovation within India.
• Facilitate strategic acquisitions: To enable the acquisition of foreign technologies and companies where such products are imported in large volumes, promoting self-reliance and reducing import dependence.

Blurb

• Invested ₹257.77 crore in eight Daughter Funds
• These funds have made further investments of ₹1,335.77 crore across 128 startups and ventures, and exited from 37 investments
• The startups have created over 23,600 jobs in high-technology sectors
• The start-ups created 368Intellectual Properties (IPs)
• The cumulative returns received by EDF from exits and partial exits stand at ₹173.88 crore