FM Sitharaman announces Rs 1,000 Cr VC fund to boost space economy
The outlay for space technology and applications for 2024-2025 is estimated at Rs 11,700 crore.
During her Budget speech on Tuesday, Union Finance Minister Nirmala Sitharaman announced the setting up a Rs 1,000-crore venture capital (VC) fund to boost India’s growing space economy.
“With our continued emphasis on expanding the space economy by five times in the next 10 years, a venture capital fund of Rs 1,000 crore will be set up,” said Sitharaman, the first finance minister to present the seventh consecutive Budget.
The move highlights the government’s commitment to advance the Indian space sector.
According to Manoj Agarwal, Managing Partner, Seafund, a deeptech focused VC fund, the VC fund will work as a strong catalyst for spacetech startups.
“The Budget synergises macro-economic expansion with targeted micro-economic interventions, catalysing the growth of the Space-Technology ecosystem, with a pronounced emphasis on bolstering private stakeholders within India’s burgeoning space sector,” Chaitanya Dora Surapureddy, Co-founder and CFO of Dhruva Space told YourStory.
“This strategic thrust aims to fortify India’s stature as a leading Space Nation, propelling innovation and fostering a conducive environment for private enterprise to thrive in the Space domain,” he added.
In 2021, the government opened the space sector to private players. It also liberalised the sector through Indian Space Policy 2023, which enables private enterprises to carry out end-to-end activities, and by allowing 100% foreign direct investment (FDI) to lower entry barriers.
India sits at a prime spot in the global space economy with innovative low-cost solutions. The country's space sector accounted for approximately 2.1% of the global space economy in 2020, according to an ISpA-E&Y report.
Anil Joshi, Managing Partner of Unicorn India Ventures, noted that the fund of funds for spacetech is a testimony to India’s capability to come up with breakthrough solutions at low cost.
“This will certainly help spacetech companies to look for much-needed early-stage capital to get started,” he added.
According to IN-SPACe, the Indian space economy has the potential to reach $44 billion in the next 10 years from the current $8.4 billion. This is likely to expand the country’s share of the global space economy by four-fold from current 2% to 8%.
“We strongly believe that a Rs 1,000-crore fund for space startups and the space economy will catalyse India’s dominance in the global space market!” remarked Vishesh Rajaram, Managing Partner of Speciale Invest, an early-stage venture capital firm.
Rajaram believes the trust and focus from the government combined with the FDI policy announced earlier this year will lead to more investment participation in the sector from India and internationally.
The growth in the space economy will be fuelled by the participation of startups including Agnikul Cosmos, Skyroot Aerospace, Pixxel, Dhruva Space, and Bellatrix Aerospace to drive innovation in both space launches and downstream technologies.
“Space progress is also a part of a country’s economic progress. The correlation between space and economy goes long back and this attestation (formation of fund) from the government for private players is a big boon as it would remove all doubts about the sector itself for all stakeholders of the sector,” Moin SPM, Co-founder and COO of Agnikul Cosmos, told YourStory.
“With policy already in play, India’s aspirations from private players in the space industry is getting broader and bigger,” he added.
The outlay for space technology and applications for 2024-2025 is estimated at Rs 11,700 crore. This allocation is higher than the 2023-2024 Budget estimates for space technology, which was Rs 11,000 crore, while the revised estimates were Rs 9,706 crore.
(This article was updated with quotes.)
Edited by Megha Reddy