By Venkatachari Jagannathan
India is gearing up to cement its position as a key player in the global space arena with the government under Prime Minister Narendra Modi, actively encouraging private investment in the sector. And several states have come out with their space sector specific policies to attract investments.
Currently, India's space economy is valued at approximately $8.4 billion, representing 2% of the global market. The government has set an ambitious target to expand this to $44 billion by 2033, aiming for $11 billion in exports and a global market share of 7-8%.
India’s expansion henceforth will be led by private sector
This expansion is expected to be significantly driven by the private sector, with around 300 startups already active across various segments of India's space economy.
The Indian government also allowed 100% foreign direct investment (FDI) in the space sector unlocking new avenues for global investors, said Indian Space Association (ISPA).
The policy allows full foreign ownership under the automatic route for satellite components and systems, up to 74% for satellite manufacturing and operations, and 49% for launch vehicles and spaceports. An ISPA report said that this strategic shift is expected to drive technological advancements, boost knowledge exchange, and create valuable collaboration opportunities.
Using venture capital route to boost space activity
To further bolster this growth, the Modi government has established a Rs1,000 crore (approximately $118.6 million) Venture Capital Fund. Managed under the Indian National Space Promotion and Authorisation Centre (IN-SPACe), this fund will be strategically deployed over five years to support startups at different stages of development.
This initiative mirrors efforts by other nations that have recognized the strategic importance of the space sector. Countries like the UK (Seraphim Space Fund, £30 million), Italy (Primo Space Fund, €86 million), Japan (Space Strategic Fund, $6.7 billion), and Saudi Arabia (Neo Space Group by PIF) have established similar space-focused venture capital funds to stimulate innovation, encourage private participation, and enhance national capabilities.
Through its VC fund, India aims to adopt a similar strategy, nurturing its startups, fostering a robust space innovation ecosystem, and promoting the domestic development of space technology and related services.
States take the lead
Currently, about 300 private companies are involved in India's space sector. Industry players are awaiting the government to come out with the law governing the space sector. Meanwhile, attracting investments across various states is crucial for widespread growth.
Consequently, states like Tamil Nadu, Gujarat, Karnataka, and Maharashtra are formulating dedicated space sector policies.
These policies often include the development of clusters, space parks, and tax incentives for investors.
Notably, states such as Tamil Nadu, Karnataka, Kerala, Andhra Pradesh, and Gujarat already possess a strong foundation in the space industry due to the presence of Indian Space Research Organisation (ISRO) facilities there. Many private enterprises, including rocket and satellite manufacturers, have already established their production bases there.
Tamil Nadu is emerging as a significant space hub, with production facilities and an upcoming ISRO rocket launch pad, alongside private ventures like rocket maker Agnikul Cosmos. The state government recently approved the Tamil Nadu Space Industrial Policy 2025.
According to Industries Minister T.R.B. Rajaa, this policy aims to attract Rs10,000 crore (approximately $1.2 billion, though the text also mentions $100 billion which seems to be a typo and $1.2 billion is more consistent with other figures) in investment, create at least 10,000 high-value jobs, and develop a skilled workforce in space technologies.
Rajaa emphasised that the policy seeks to create a comprehensive space ecosystem, encompassing everything from payloads and platforms to launch pads and downstream analytics.
Similarly, Prime Minister Modi's home state Gujarat and home to ISRO's Space Applications Centre (SAC), has introduced its own space sector policy. Besides offering incentives and subsidies, the coastal state is also keen on hosting a rocket launch pad. The Gujarat government will subsidize 25% of the launch cost for satellites manufactured in the state, up to a maximum of ₹5 crore (approximately $593,000).
Additionally, qualified space sector units in Gujarat can avail benefits offered under the state's IT/ITeS and Electronics Policies.
Last year, the Karnataka government released its draft space policy, targeting a 50% share of the national space market and a 5% share of the global space technology market.The policy includes plans for dedicated manufacturing parks for space sector companies.
Recently, the Karnataka government signed a Memorandum of Understanding (MoU) with IN-SPACe to establish a Centre of Excellence for Space Technologies and a dedicated Space Manufacturing Park.
Priyank M Kharge, Karnataka’s Minister for Electronics, stated that this collaboration is a key step in boosting the state's New Space ecosystem, aiming to foster entrepreneurship, attract global investments, and create high-skilled jobs.
Not to be outdone, Maharashtra’s Chief Minister Devendra Fadnavis recently announced that his government will also introduce a policy to attract investments in the space sector.
(Venkatachari Jagannathan is an independent journalist. He can be reached at venkatacharijagannathan@gmail.com.)
Views are personal and do not represent the stand of this publication.
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