Summary:

  • The Union Cabinet has approved a Venture Capital (VC) Fund of Rs 1,000 crore to bolster India’s emerging space sector startups.

  • The move aligns with the Centre’s broader vision to retain and nurture homegrown space technology companies

  • Finance Minister Nirmala Sitharaman first announced the creation of the fund during the Union Budget 2024-25

The Union Cabinet has approved a Venture Capital (VC) Fund of Rs 1,000 crore to bolster India’s emerging space sector startups. This initiative, which is set to support around 40 startups across the country, is designed to accelerate the growth of private space companies and catalyze advancements in space technology. The government’s focus on developing this sector underscores India’s ambition to become a global player in space exploration and satellite technology.

The move aligns with the Centre’s broader vision to retain and nurture homegrown space technology companies. By providing this capital infusion, the government hopes to create a conducive environment for startups to scale and innovate. The expectation is that this financial support will not only drive technological breakthroughs but will also attract additional investments for later-stage growth, both from domestic and international investors. This, in turn, could further solidify India’s position in the global space economy.

Finance Minister Nirmala Sitharaman first announced the creation of the fund during the Union Budget 2024-25, marking it as a significant step toward fostering private sector participation in the space industry. The total fund of Rs 1,000 crore will be deployed over five years, with allocations ranging between Rs 150-250 crore annually. For the financial year 2025-26 (FY26), Rs 150 crore has been set aside, followed by Rs 250 crore for each of the subsequent three years. The final year will see a reduced allocation of Rs 100 crore, completing the funding cycle.
The Indian National Space Promotion and Authorisation Centre (IN-SPACe), the regulatory body that oversees private sector participation in space-related activities, will be responsible for managing the fund. IN-SPACe’s role in this initiative will be pivotal as it has already been facilitating private sector involvement in space activities through various regulatory and promotional measures. With the administration of this VC fund, IN-SPACe is set to become even more critical in guiding the growth of space startups in India.

The proposed fund will invest in startups at various stages of development, with the investment amount varying depending on the company’s maturity, growth potential, and the strategic impact of their technology on national space capabilities. Early-stage companies could receive anywhere between Rs 10 crore and Rs 30 crore, while those in the later stages of growth may be eligible for investments between Rs 30 crore and Rs 60 crore. The tiered investment approach is intended to provide the right kind of support at different phases of a startup’s lifecycle, ensuring they have the resources needed to scale their operations and achieve commercial viability.

India’s space technology landscape has seen a surge in private players over the past few years, with several startups gaining attention for their innovative solutions. Companies like Agnikul Cosmos, Skyroot Aerospace, and Bellatrix have already made headlines with successful fundraising efforts and technological breakthroughs. Other notable names in the space sector include GlaxEye, Dhruva, SatSure, Vesta Space, Digantara, and InspeCity. These startups have raised venture capital to develop products and services ranging from small satellite launch vehicles to space debris monitoring solutions.

With the new VC fund, the government aims to strengthen the ecosystem for these startups, enabling them to compete on the global stage. The availability of more capital could also encourage the development of new space technologies, such as advanced satellite systems, propulsion technologies, and space exploration tools.

In conclusion, the Rs 1,000 crore VC fund represents a crucial step in nurturing India’s private space sector. By providing financial backing to promising startups, the government is laying the foundation for future innovations in space technology. Over the next five years, the fund is expected to foster collaboration between the public and private sectors, attract additional investment, and help India achieve new milestones in its space exploration journey. The initiative signals a clear commitment to enhancing the country’s space capabilities and becoming a global leader in the field.