The Union Cabinet of India has approved the establishment of a ₹1,000 crore (approximately $120 million) Venture Capital Fund aimed at supporting start-ups in the space sector. This decision, made on October 24, 2024, is part of the government's broader strategy to enhance private sector participation in the space economy, which is currently valued at around $8.4 billion and is projected to grow to $44 billion by 2033.

The fund is designed to support approximately 40 start-ups across various stages of development within the space supply chain.

It aims to address the critical need for risk capital, as traditional financial institutions have been hesitant to invest in high-tech sectors like space.

The initiative is expected to generate thousands of direct and indirect jobs while fostering innovation in satellite technology, launch vehicles, and space applications.

The fund will operate under the aegis of IN-SPACe (Indian National Space Promotion and Authorization Centre), which was established to facilitate private sector involvement in space activities.

Start-Ups can expect investments ranging from ₹10 crore to ₹60 crore, depending on their development stage and potential impact on national space capabilities. Specifically:

Growth-Stage: ₹10 crore to ₹30 crore
Late Growth-Stage: ₹30 crore to ₹60 crore

The average annual deployment from the fund is projected to be between ₹150 crore and ₹250 crore, with a total deployment period extending up to five years.

1 2025-26 150.00
2 2026-27 250.00
3 2027-28 250.00
4 2028-29 250.00
5 2029-30 100,00
Total Envelope (VC) 1000.00
S.No. Financial Year Estimate (In Rs.Crores)

Details:

The Fund is strategically designed to advance India’s space sector, aligning with national priorities and fostering innovation and economic growth through the following key initiatives:

a. Capital Infusion
b. Retaining Companies in India
c. Growing Space Economy
d. Accelerating Space Technology Development
e. Boosting Global Competitiveness
f. Supporting Atmanirbhar Bharat
g. Creating a Vibrant Innovation Ecosystem
h. Driving Economic Growth and Job Creation
i. Ensuring Long-Term Sustainability

By addressing these points, the fund aims to strategically position India as one of the leading space economies.

Benefits:

i. Capital infusion to create a multiplier effect by attracting additional funding for later-stage development, thereby instilling confidence in private investors.

ii. Retention of space companies domiciled within India & countering the trend of Indian companies domiciling abroad.

iii. Accelerate private space industry’s growth to meet the goal of a five-fold expansion of the Indian Space Economy in next ten years.

iv. Drive advancements in space technology and strengthening India’s leadership through private sector participation.

v. Boost global competitiveness.

vi. Supporting Atmanirbhar Bharat.

Impact, Including Employment Generation Potential:

The proposed fund is expected to boost employment in the Indian space sector by supporting start-ups across the entire space supply chain—upstream, midstream, and downstream. It will help businesses scale, invest in R&D, and expand their workforce.

Each investment could generate hundreds of direct jobs in fields like engineering, software development, data analysis, and manufacturing, along with thousands of indirect jobs in supply chains, logistics, and professional services. By fostering a strong start-up ecosystem, the fund will not only create jobs but also develop a skilled workforce, driving innovation and enhancing India’s global competitiveness in the space market.

The Government of India, as part of its 2020 space sector reforms, established IN-SPACe to promote and oversee private sector participation in space activities. IN-SPACe has proposed a ₹1,000 crore Venture Capital Fund to support the growth of India’s space, economy, currently valued at S8.4 billion, with a target to reach $44 billion by 2033.

The fund aims to address the critical need for risk capital, as traditional lenders are hesitant to fund start-ups in this high-tech sector. With nearly 250 space start-ups emerging across the value chain, timely financial support is crucial to ensure their growth and prevent talent loss overseas. The proposed government-backed fund will boost investor confidence, attract private capital, and signal the government’s commitment to advancing space reforms. It will serve as an Alternative investment Fund under SEBI regulations, providing early-stage equity to start-ups and enabling them to scale for further private equity investments.