The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved the establishment of a ₹1,000 crore Venture Capital Fund dedicated to the space sector, under the auspices of the Indian National Space Promotion and Authorization Centre (IN-SPACe). This initiative aims to significantly enhance India’s space capabilities and drive innovation within the industry.
The fund will be deployed over a period of up to five years, starting from the commencement of operations. Each year, the investment is projected to range from ₹150 crore to ₹250 crore, depending on investment opportunities. The allocation for the fund is structured as follows: ₹150 crore in the financial year 2025-26, followed by ₹250 crore for each of the next three years, and a final allocation of ₹100 crore in 2029-30, culminating in a total envelope of ₹1,000 crore.
Investments from the fund are expected to range between ₹10 crore and ₹60 crore per startup, contingent on the company’s growth stage and its potential contributions to national space capabilities. The fund is projected to support approximately 40 startups, focusing on early-stage and late-stage growth, with investments aimed at fostering substantial advancements in the sector.
Strategically, the Venture Capital Fund is designed to align with national priorities and stimulate economic growth through various initiatives, including capital infusion, retention of space companies in India, and enhancement of global competitiveness. By addressing these areas, the fund seeks to position India as a significant player in the global space economy.
The anticipated benefits of the fund are considerable. It aims to create a capital infusion that attracts additional funding for later-stage development, retain Indian space companies, and counter trends of companies relocating abroad. The fund is also expected to accelerate the growth of the private space industry, targeting a five-fold expansion of the Indian Space Economy over the next decade, while reinforcing India’s leadership through increased private sector participation.
Regarding employment generation, the fund is poised to have a substantial impact across the entire space supply chain. Investments are likely to create hundreds of direct jobs in fields such as engineering, software development, and manufacturing, along with thousands of indirect jobs in logistics and professional services. By nurturing a robust startup ecosystem, the fund aims to develop a skilled workforce, enhancing India’s competitive edge in the global space market.
This Venture Capital Fund initiative is part of the Government of India’s broader reforms in the space sector, initiated in 2020 with the establishment of IN-SPACe to promote private sector participation in space activities. Currently, India’s space economy stands at approximately $8.4 billion, with a target of reaching $44 billion by 2033. Timely financial support is critical for the growth of nearly 250 emerging space startups, and this government-backed initiative is set to bolster investor confidence, attract private capital, and reaffirm the government’s commitment to advancing space reforms. The fund will operate as an Alternative Investment Fund under SEBI regulations, providing early-stage equity to startups and facilitating further private equity investments.
