The Union Cabinet of India has approved the establishment of a ₹1,000 crore Venture Capital Fund dedicated to the space sector.
This initiative, executed under the aegis of the Indian National Space Promotion and Authorization Center (IN-SPACe), aims to foster innovation, drive economic growth, and strengthen India’s position as a leader in space exploration and technology.
Financial Overview
The proposed fund is set to operate over a five-year deployment period, with an average annual investment ranging from ₹150 to ₹250 crore, contingent upon the availability of investment opportunities.
The financial breakdown is as follows:
- 2025-26: ₹150 crore
- 2026-27: ₹250 crore
- 2027-28: ₹250 crore
- 2028-29: ₹250 crore
- 2029-30: ₹100 crore
This funding will focus on supporting approximately 40 startups, with investments typically ranging from ₹10 crore to ₹60 crore based on the company’s growth stage and its potential impact on India’s space capabilities.
Early-stage startups can receive ₹10 crore to ₹30 crore for R&D and operational costs, while late-growth startups can access ₹30 crore to ₹60 crore to scale operations and expand market reach.
Strategic Objectives
The fund aims to address several key areas to advance India’s space sector, including:
- Capital Infusion: Attracting additional funding to stimulate later-stage development.
- Retention of Companies: Encouraging space firms to remain operational within India, countering the trend of companies relocating abroad.
- Expansion of the Space Economy: Aiming for a five-fold increase in the Indian space economy within the next decade.
- Technological Advancement: Accelerating the development of space technologies through private sector engagement.
- Global Competitiveness: Positioning Indian firms to compete effectively in the international space market.
- Support for Atmanirbhar Bharat: Strengthening India’s self-reliance in the space domain.
Employment Generation and Economic Impact
The establishment of this fund is expected to generate significant employment opportunities within the space sector.
By providing crucial support across the entire space supply chain—upstream, midstream, and downstream—the fund will empower startups to scale operations, invest in research and development, and expand their workforce.
Each investment could create hundreds of direct jobs in areas such as engineering, software development, and manufacturing, alongside thousands of indirect jobs in logistics, supply chains, and professional services.
Background and Future Vision
The creation of this venture capital fund aligns with the Government of India’s broader reforms initiated in 2020, which aimed to promote private sector participation in space activities.
IN-SPACe, established as part of these reforms, identified the need for a dedicated fund to provide risk capital for space startups, which have surged to nearly 250 in number.
This fund will serve as an Alternative Investment Fund under SEBI regulations, offering early-stage equity to startups and paving the way for future private equity investments.
With the Indian space economy currently valued at $8.4 billion and projected to reach $44 billion by 2033, the government’s commitment to fostering a vibrant space ecosystem signals a robust future for the sector.
The establishment of the ₹1,000 crore Venture Capital Fund not only aims to stimulate innovation and entrepreneurship but also to reinforce India’s stature as a significant player in the global space industry.
