With Rs 1,000-Crore Budget Push For Start-Ups, Centre Targets Five-Fold Increase in Space Economy by 2033

Space start-ups have welcomed the government’s decision to provide Rs 1,000 crore Venture Capital (VC) fund in the Union Budget 2024 which is expected to benefit at least 30 early-stage companies. With this, the Union Finance Minister Nirmala Sitharaman also announced the government’s target of a five-fold increase in the space economy this decade.

India’s space economy currently stands at around $8.4 billion. However, its share in the global space economy stands at just 2%, despite being among the top five space-faring nations in the world. The Decadal Vision prepared by the Indian Space Research Organization (ISRO) and IN-SPACe aims to take this to nearly $44 billion by 2033, making it 7-8% of the global economy.

“Many start-ups have come-up in the last few years. As they are starting to mature, they will need some serious funding. The space sector is such that it can take years to get some returns, therefore it’s critical that there is some initial support from the government. The FDI will also flow in, and together it will make ample capital available for the start-ups,” said IN-SPACe Chairman Pawan Goenka, adding that it will create a fertile ground for the start-ups to thrive.

The Rs 1,000-crore funding is expected to benefit at least 30 start-ups from across the country, which will be identified based on their business plans, however, the details are yet to be worked out. The announcement follows the government’s landmark decision to open the space sector for private players in 2020 – leading to a stark jump in the number of space start-ups to over 200.

“We had previously advocated for increased financial incentives to support space start-ups, because capital funds is the biggest requirement. Although there has been some inflow from private venture capitalists, but this additional support is definitely a step forward, and addresses the funding challenges faced by these nascent ventures in this capital-intensive domain. We are quite optimistic that the space economy will grow by more than five times by 2033,” said Lt. Gen. AK Bhatt, DG, Indian Space Association, which represents private space companies in the country.

“In addition, the proposal for establishment of 12 industrial parks across India will include the space sector, as this will provide a substantial boost to the space and satellite manufacturing industry, which has long called for the creation of space parks. These measures are pivotal for the growth and development of India’s space ecosystem,” he added.

India is currently among the top five spacefaring nations which have end-to-end capabilities in space research and development, including the capability to launch from its own land and operate programs of earth observation, satellite communication, meteorology, space science as well as navigation and ground infrastructure. In 2023, it also became the first country to successfully land near the south pole of the moon with Chandrayaan-3.

“The expansion of India’s space economy is set to impact various sectors, from satellite-based services in agriculture and disaster management to advanced communication systems and space exploration missions. However, to truly realize this potential, comprehensive support for start-ups is essential,” said Anil Prakash, DG, Sat-Com Industry Association (SIA-India).

The last few years also witnessed increased participation of private players. Hyderabad-based Skyroot launched Vikram-S (Prarambh mission), a suborbital launch vehicle in November 2022. Chennai-based start-up Agnkul established the first private launchpad and mission control center at the ISRO campus in Sriharikota, and successfully test-fired its indigenously-built rocket in May this year.