The Rs 1,000 crore venture capital fund proposed by Finance Minister Nirmala Sitharaman for investments in the space economy will enhance early-stage funding availability and significantly boost startup participation in the sector, according to investors and founders.
In her budget speech Tuesday, Sitharaman described the fund as the government’s “continued emphasis on expanding the space economy by five times in the next 10 years”.
Invest India, the government’s investment promotion agency estimates that the Indian space economy will be worth $13 billion by 2025.
The minister did not provide details on which entity will establish the fund or the specifics of the investment process.
The fund would make equity investments more accessible for new entrepreneurs at the venture capital stage, said Pawan K Goenka, chairman of the Indian National Space Promotion and Authorisation Centre (IN-SPACe), the private space sector regulator. “At IN-SPACe, we look forward to supporting the growth of the space economy and nurturing an enabling ecosystem for NGEs (non-government entities),” he added.
The Indian space ecosystem hosts a diverse range of startups, including Skyroot and Agnikul, which build launch vehicles, Digantara, Pixxel, and GalaxEye, which create satellites with unique payloads, and satellite data analytics firms like SatSure. All will benefit from increased government focus, said Ganapathy Subramaniam, veteran deep-tech investor and founding partner of Yali Capital.
Srinath Ravichandran, cofounder of space-tech startup Agnikul, called the announcement “wonderful news.” He believes it will encourage the emergence of larger players in the space startup ecosystem.
Chennai-based Agnikul Cosmos established India’s first private launchpad and mission control center at the Isro campus in the Satish Dhawan Space Centre, Sriharikota, in November 2022. It launched the world’s first rocket with a 3D-printed engine on May 30 this year.
“This fund will provide crucial financial support to innovative startups and companies… While we recognise that even larger funds will be needed as the sector grows, this is an excellent start and a vital stepping stone,” said Awais Ahmed, cofounder and chief executive of Pixxel.
The new fund will also enhance the benefits from changes in foreign direct investments for space startups notified in April this year, said Vishesh Rajaram, managing partner at venture capital firm Speciale Invest.
The government now allows 74% FDI for satellite manufacturing, up to 49% for launch vehicles, and 100% for manufacturing components and systems, all under the automatic route.
