During her Budget speech on Tuesday, Union Finance Minister Nirmala Sitharaman announced the setting up a Rs 1,000-crore venture capital (VC) fund to boost India’s growing space economy.
“With our continued emphasis on expanding the space economy by five times in the next 10 years, a venture capital fund of Rs 1,000 crore will be set up,” said Sitharaman, the first finance minister to present the seventh consecutive Budget.
The move highlights the government’s commitment to advance the Indian space sector.
According to Manoj Agarwal, Managing Partner, Seafund, a deeptech focused VC fund, the VC fund will work as a strong catalyst for spacetech startups.
In 2021, the government opened the space sector to private players. It also liberalised the sector through Indian Space Policy 2023, which enables private enterprises to carry out end-to-end activities, and by allowing 100% foreign direct investment (FDI) to lower entry barriers.
India sits at a prime spot in the global space economy with innovative low-cost solutions. The country’s space sector, which accounted for approximately 2.1% of the global space economy in 2020, amounting to $9.6 billion, is set to grow to $13 billion by 2025, at a compound annual growth rate of 6%, according to an ISpA-E&Y report.
Anil Joshi, Managing Partner of Unicorn India Ventures, noted that the fund of funds for spacetech is a testimony to India’s capability to come up with breakthrough solutions at low cost.
“This will certainly help spacetech companies to look for much-needed early-stage capital to get started,” he added.
According to IN-SPACe, the Indian space economy has the potential to reach $44 billion in the next 10 years from the current $8.4 billion. This is likely to expand the country’s share of the global space economy by four-fold from current 2% to 8%.
“We strongly believe that a Rs 1,000-crore fund for space startups and the space economy will catalyse India’s dominance in the global space market!” remarked Vishesh Rajaram, Managing Partner of Speciale Invest, an early-stage venture capital firm.
Rajaram believes the trust and focus from the government combined with the FDI policy announced earlier this year will lead to more investment participation in the sector from India and internationally.
The growth in the space economy will be fuelled by the participation of startups including Agnikul Cosmos, Skyroot Aerospace, Pixxel, Dhruva Space, and Bellatrix Aerospace to drive innovation in both space launches and downstream technologies.
The outlay for space technology and applications for 2024-2025 is estimated at Rs 11,700 crore. This allocation is higher than the 2023-2024 Budget estimates for space technology, which was Rs 11,000 crore, while the revised estimates were Rs 9,706 crore.
