How Government’s strategic funding may propel India’s space economy to $100 Billion

The Indian National Space Promotion and Authorisation Centre has announced several schemes to promote participation of private enterprises in space activities. This includes a Rs 1,000 crore Venture Capital Fund and a Rs 500 crore Technology Adoption Fund announced by the Department of Space. 

India scaling new high in space tech: Skyroot’s Vikram-1 mission in focus

The private sector has already recorded several key milestones in recent months — including the launch of Skyroot Aerospace‘s Vikram-1 mission which successfully reached a 450-km low Earth orbit on July 18 deploying four payloads. The mission made India the third country after the US and China to achieve a privately developed orbital launch capability. 

“Government reforms have opened the space sector to private participation through IN-SPACe and NSIL, enabling commercialisation of launch services, technology transfers, and enhanced global market participation,” Union Minister Jitendra Singh told the Rajya Sabha on Thursday.

Policy framework: How the 2023 space policy opened private access 

Private companies had first gained access to the space sector following the Indian Space Policy of 2023. The document defined the roles and responsibilities of all the contributors to the national space ecosystem. State governments were subsequently urged to establish dedicated space manufacturing clusters to strengthen the domestic supply chain, attract investments, and create an integrated space industrial ecosystem.

Singh told the Rajya Sabha last week that 53 unique private entities have so far been authorised under space sector reforms. He also highlighted efforts to position the country as a global launch market—with “government interventions primarily focused on creating baseline infrastructure, facilitating technology transfer, developing technologies, and promoting investments”. 

Antariksh VC Fund: Capital Deployment Strategy for Early-Stage Startups

The Centre established a Rs 1,000 crore Venture Capital Fund to support space start-ups under the Indian National Space Promotion and Authorisation Centre. The initiative is intended to support around 40 emerging space-tech start-ups over a five-year deployment window. SIDBI Venture Capital Limited manages the capital deployment. with investments ranging from Rs 10 crore to Rs 60 crore based on growth stage.

Dr. Jitendra Singh, the Minister of State (MoS) responsible for the Department of Space told Parliament last week that it had contributed Rs 182.87 crore (cumulatively Rs 188.93 crore) into the Antariksh Venture Capital Fund through IN-SPACe in FY27. The SEBI-registered Category II Alternative Investment Fund was greenlit last year with the primary objective of providing equity capital to emerging space-tech Start-ups to support technology development, commercialization, and scaling of operations. The Parliament was told that it had selected three startups for investment.

“The Fund’s primary investment objective is to provide much-needed equity capital to emerging space-tech start-ups at various stages of development and support the scaling of operations and the commercialization of new technologies…The investments under the Fund are intended to provide capital to eligible space-sector startups for technology development, commercialization, and scaling of operations,” Singh told the Lok Sabha.

Technology Adoption Fund: Beneficiaries and Project Specifics 

IN-SPACe has also launched a Rs 500 crore Technology Adoption Fund to help space start-ups and MSMEs — offering financial backing up to 60% of project costs (up to 40% for larger industries) with a maximum cap of Rs 25 crore per project. 

According to an official communication in February 2025, the fund will also support the transition of early-stage space technologies developed by Indian companies into commercially viable products. With TAF, IN-SPACe aims to support a wide range of outcomes — from the development of new space products to the creation of intellectual property that can drive future research and development.

Bengaluru-based Astrobase Space Technologies and SatSure Analytics India, and Hyderabad-based TM2SPACE Technologies were also selected as the first beneficiaries of the Rs 500 crore technology adoption fund in June. 

Astrobase was selected to develop an 800 kN reusable LOX-LNG closed-cycle liquid rocket engine intended for medium-to-heavy lift launch vehicles. Meanwhile SatSure will build Dhaarini’ — its foundational AI model for Earth observation applications. TM2SPACE is working on an indigenous AI-powered star tracker system for satellites that will allow high-precision attitude determination for imaging and communication missions.

Funding Trends: $871 Million Capital Inflow and Key Unicorn Milestones 

According to a Traxcn report released in late July, the private spacetech ecosystem has raised a record $871 million across 241 funding rounds through July 2026. It added that the space now included 274 active companies — with 72 startups securing institutional equity funding across segments including launch vehicles, satellite manufacturing, propulsion systems, space situational awareness, earth observation and downstream analytics. 

Funding in the sector has increased sharply from $43 million across 12 rounds in 2021 to a record $200 million across 53 rounds in 2025. Five major funding rounds — including Skyroot Aerospace ($50 million Series C) and Digantara ($50 million Series B) and AgniKul Cosmos ($17 million Series C) — together accounted for $158 million, representing more than half of the capital raised across 2025 and 2026. 

Key private companies leading the space race

Hyderabad-based Skyroot Aerospace created history on July 18 with the maiden test flight of Vikram-1 — reaching a 450-km low Earth orbit and deploying four payloads. It became the country’s first space-tech unicorn in May 2026 after raising $60 million in a funding round led by Sherpalo Ventures and Singapore’s sovereign wealth fund GIC. Skyroot is reportedly planning another test flight later this year before commencing commercial launch operations in 2027.

The milestone comes less than two years after IIT Madras-incubated start-up Agnikul launched the world’s first rocket with a single piece 3D printed engine. The remarkable feat was achieved entirely through indigenous design and development. The Chennai-based company raised Rs 150 crore in a November 2025 funding round that valued it at $500 million.

Another indigenous startup, Digantara, hit a $200 million valuation in January this year after Series B funding. The Peak XV and Kalaari-backed spacetech company recently inked a pact with Singapore’s Defence Science and Technology Agency to protect satellites from space debris.

Ecosystem Reforms: Infrastructure Support and Satellite Services 

Singh also told Parliament last week that the nature of activities undertaken by the authorised private entities included the “establishment and operation of satellites and hosted payload”. They were also involved in running ground stations, capacity provisioning of foreign-owned satellites over India, and data dissemination of primary data pertaining to Indian Territory, Undertaking Orbital/Sub-orbital launch from Indian territory.

• Introduction of liberalised Foreign Direct Investment policy for the space sector.
• Access to ISRO infrastructure, technical expertise, and mentorship to support private sector growth.
• Launch of skill development initiatives to address the evolving workforce requirements of the space sector.
• Establishment of a Technical Centre to provide affordable testing, validation, and simulation facilities for space systems. 
• Enabling transfer of ISRO-developed technologies to industry for commercialisation.
• Providing opportunities to validate space technologies through the PSLV Orbital Experimental Module platform.
• Launch of the “Satellite Bus as a Service (SBaaS)” initiative to develop indigenous satellite platform capabilities and accelerate satellite development. 
• Establishment of Earth Observation constellation under PPP model, involving the development, launch, and operation of an indigenous commercial Earth Observation satellite constellation to enhance India’s Earth observation capabilities and data services. 

Challenges ahead

The massive capital push has not overcome structural gaps faced by the nascent Indian spacetech ecosystem. Growth-stage funding remains thin — with most of the recent capital and government support going toward seed and early-stage rounds. It also remains heavily concentrated among a tiny handful of frontrunners such as Skyroot Aerospace, Pixxel, and Agnikul Cosmos. Many companies looking to scale from prototype to production-grade manufacturing therefore struggle to find late-stage investors who will underwrite the capital intensity of hardware-heavy space ventures.

It is early days yet for government initiatives such as the Antariksh fund. Merely three companies have been selected so far against its entire five-year, 40-startup target. Time and continued support is required before the full impact of such funds become visible. The newly announced Technical Centre and state-level manufacturing clusters will also take time to mature. And Indian companies looking to compete at a global scale will require fully developed supply chains, testing infrastructure, and skilled labour structures. 

Private launch and satellite companies also require anchor customers (such as government missions, ISRO contracts, or long-term data-purchase agreements) to justify manufacturing at scale.

What comes next?

Government-led regulatory reforms have been instrumental in the development of India’s first SpaceTech unicorn and its orbital launch. The country achieved its first private orbital launch within six years of opening the space sector to private players in 2020. 

The Rs 1,500 crore in venture capital and technology adoption funding mark a crucial step forward. But it will require sustained government support and private orbital launches for the domestic space economy to reach $100 billion by 2040.

Disclaimer: This article is for informational purposes only and does not constitute financial advice, an endorsement, or an offer or solicitation to invest in any space-tech start-up, venture fund, or equity security. Valuations, funding figures, and growth projections mentioned are derived from parliamentary statements and industry reports, and should not be relied upon as investment recommendations. Early-stage and private space technology investments carry substantial risk, operational complexity, and high capital intensity; investors should consult a SEBI-registered investment advisor or qualified financial professional before making any financial decisions.