From Patents to Production: The Metrics That Reveal Whether EDF Is Working
Supplier approvals, domestic value-added and export performance offer a clearer test of EDF effectiveness than funding volumes or IP filings
A background note can be accessed here: Government Deploys ₹257.77 Cr to Nurture Deep-Tech Ecosystem
Dr. Ritwik Sasmal: Senior Economist, IFB Industries Ltd.
SDG 8: Decent Work and Economic Growth | SDG 9: Industry, Innovation and Infrastructure
Department for Promotion of Industry and Internal Trade
The Electronics Development Fund (EDF), structured as a Fund of Funds, has invested ₹257.77 crore and leveraged more than ₹1,335 crore of venture capital across 128 deep-tech start-ups. How does this model influence start-up behaviour?
The EDF’s fund-of-funds structure modestly expands risk appetite in deep tech, but it does not push founders into true frontier bets. Its ₹257.77 crore has leveraged about ₹1,335 crore across 128 start-ups – roughly ₹12-13 crore per firm, of which only a fraction is public capital. That is sufficient for proof-of-concept and early production, not for the heavy lift of pilots or scaled manufacturing, where costs rise into the tens or hundreds of crores.
Because EDF-backed VCs can realistically finance only the first two stages – pre-seed and seed - founders gravitate toward “safer deep tech”: applied innovations that can demonstrate traction within three to five years. The model therefore nudges behaviour toward nearer-to-market problem-solving, rather than long-gestation scientific exploration.
Whether these start-ups move beyond that early phase ultimately depends on their ability to build sustained R&D capability and produce world-class, price-competitive products. That requires infrastructure and regulatory support well beyond what catalytic capital alone can provide. Government can meaningfully shift behaviour here: cheaper shared R&D facilities, lower set-up costs, predictable compliance, and targeted duty relief on specialised inputs all make deeper technological bets more viable. In such an ecosystem, EDF becomes a useful spark – but not the primary driver – of genuinely ambitious deep-tech entrepreneurship.
While the EDF has supported job creation and IP generation, deep-tech activity remains concentrated in a handful of states. What institutional or policy barriers continue to limit innovation ecosystems in less-active regions, and how might government-backed capital be redesigned to encourage a more geographically balanced innovation landscape?
Deep-tech activity remains uneven because most regions still lack the institutional base it requires. In less-active states, research capacity is limited, talent is scarce, infrastructure is unreliable, approvals are slow, and state schemes change too frequently. These gaps make it hard for founders to prototype, hire, and engage early customers – prerequisites before any capital can bite.
Such weaknesses endure because deep-tech ecosystems depend on dense networks of universities, experienced engineers, risk-tolerant investors and responsive local officials. Cities like Bengaluru, Hyderabad and Pune have built this over time, drawing founders and capital inward. Simply directing EDF or other public funds to weaker regions cannot recreate these conditions; entrepreneurs able to use that money productively have often already moved to the established hubs.
A more balanced geography requires tying government-backed capital to clear state-level commitments. Rather than spreading funds widely, states and the Centre should co-invest in a few focused hubs aligned with national deep-tech priorities. A joint mechanism can condition EDF-style investment on tangible deliverables – serviced land, reliable power, shared labs, stable compliances and time-bound clearances.
Public capital then follows credible ecosystems as they emerge, instead of trying to manufacture them administratively.
One stated goal of the EDF is to reduce India’s reliance on imported electronics system design and manufacturing. Beyond input metrics like start-ups funded or patents filed, what outcome metrics should policymakers track to evaluate the fund’s strategic effectiveness?
For a fund designed to reduce import dependence in electronics design and manufacturing, the key test is whether its start-ups are embedding themselves in real value chains rather than surviving on grants and prototypes. The clearest indicator is supplier integration. If India is assembling iPhones, do any EDF-backed firms supply a component, material, testing solution or embedded software into that chain? Even a Tier-2 or Tier-3 foothold would signal that the product meets global benchmarks on quality, reliability and cost.
Outcome metrics should reflect this market-facing logic. Policymakers should track how many EDF-supported firms are approved suppliers to global OEMs and major Indian manufacturers, and what proportion of their revenue comes from such customers. They should monitor the domestic value-added in these firms’ bill of materials, the extent to which imported inputs are being substituted, and the share and growth of export revenues – including how product prices and specifications compare with international peers. It also matters how many of these companies cross meaningful revenue thresholds on the strength of their own technology, not on government procurement alone.
If these indicators move in the right direction, the EDF is not just funding start-ups; it is quietly shifting India’s position in the electronics value chain.
Author:
Views are personal.