Budget 2026: From experiments to scale, space industry wishlist

The stunning visual of a rocket rising from the Sriharikota launch pad often masks the ground reality of the balance sheets that make such feats possible.

For the founders and investors behind India’s burgeoning space corridor, the thrill of orbital success is increasingly met with the sobering necessity of commercial sustainability.

As the nation prepares for its next fiscal roadmap, the conversation has shifted from the mere possibility of private participation to the urgent need for a structured marketplace.

Industry experts, founders, and investors expect the upcoming Union Budget to provide a decisive shift from project-led experimentation to programme-led scale by establishing the government as a primary anchor customer.

Anchor procurement demand

Spacetech leaders believe that predictable demand is more catalytic for growth than capital alone. While the Indian Space Policy 2023 opened the doors, founders argue that the government must now step through them as a buyer.

Indian Space Association (ISpA) has called for a 50% mandate for all government procurement of space-based services and hardware to be sourced from domestic private entities. This would mirror global best practices where agencies like NASA and the ESA source the vast majority of their systems from the private sector, as the apex industry body.

Industry experts and founders said that moving towards a service-based model would be a game-changer for the ecosystem. Keyur Gandhi, Director of Space Regulatory and Commercialisation at Dhruva Space, believes the focus should shift toward long-term utility.

“Funding and procuring multi-application constellations through Data-as-a-Service contracts, rather than asset ownership, would materially accelerate global competitiveness. Parallelly, modernising defence acquisition frameworks and streamlining Space-data adoption across Central and State agencies would unlock scale, revenue predictability, and faster commercialisation for Indian Space Tech firms,” Gandhi noted. Dhruva Space is a full-stack space engineering solutions provider.

This sentiment is echoed by those on the front lines of deeptech hardware. Apurwa Masook, Co-founder and CEO of SpaceFields, argues that capital naturally follows the clarity of a purchase order. SpaceFields is focused on developing advanced solid propulsion systems and energetic materials for the aerospace and defence sectors.

“When procurement frameworks are liberalised, startup-friendly, and time-bound, they create visible demand pipelines. Capital naturally follows demand. Investors are willing to underwrite risk if they see structured pathways from R&D to procurement and revenue realisation. What startups struggle with today are elongated timelines, opaque evaluation cycles, and legacy procurement constructs,” Masook stated. 

For the investment community, these early orders are the ultimate de-risking mechanism. Anirudh A. Damani, Managing Partner at Artha Venture Fund, suggests that mission-linked procurement with multi-year visibility is the only way to move beyond experimentation.

“When the Budget commits to structured pilot programmes across defence, earth observation, communications, or climate monitoring with defined timelines, budgets, and adoption pathways, it allows private capital to model scale with far greater confidence. This becomes especially important as spacetech moves from experimentation to scale, where investors are backing repeatability,” Damani explained.

Fiscal reform incentives

Beyond the promise of contracts, the industry is grappling with structural cost disadvantages that hinder domestic manufacturing.

A primary recommendation from ISpA is the formal recognition of the space sector as critical infrastructure. This status would unlock access to long-term, low-cost capital and potentially reduce the cost of capital by 2% to 3%.

Founders and investors said that the current tax regime needs a thorough rationalisation to remain competitive. There are calls for satellites and launch services to be classified as zero-rated supplies under GST rather than exempt supplies, which would unblock vital input tax credits.

Furthermore, the introduction of granular codes for space-grade components would reduce the tax burden on a sector that currently operates under more general aerospace or electronics classifications.

Dhruva’s Gandhi pointed out that targeted classifications could improve the ease of doing business significantly.

He suggested, “Introducing dedicated, granular HSN/SAC codes for space-grade components and services - distinct from general Aerospace or Electronics - would reduce GST burdens, unblock input tax credits, and provide clarity on domestic value addition and import dependence.”

Gandhi also advocated for extending Special Economic Zone benefits to authorised manufacturers to unlock working capital and lower project costs.

The industry also hopes for the introduction of Production Linked Incentive (PLI) schemes and enhanced R&D tax credits. Restoring the 150% weighted deduction for in-house R&D is seen as essential for a sector where technological obsolescence happens at a rapid pace.

Streamlined policy frameworks

While the policy intent has been lauded, the speed of execution remains a point of friction. The current regulatory environment is often seen as sequential and discretionary, leading to what some call regulatory arbitrage, where companies might seek faster approval environments abroad. To prevent this, there is a push for a time-bound, single-window clearance mechanism through IN-SPACe.

Investors are particularly sensitive to these delays, as they directly impact valuations and exit potential. Bhaskar Majumdar, Managing Partner at Unicorn India Ventures, highlighted the need for a transparent roadmap for niche but vital services.

“A predictable and clear framework would address such concerns as it will increase investors’ confidence, which will lead to faster deal closure and also provide long-term scalability ecosystem to the companies... A transparent roadmap that defines where and how private services will be procured would materially unlock patient capital,” Majumdar noted.

The space industry is also waiting for a Comprehensive Space Act that would grant statutory authority to IN-SPACe as an independent civilian regulator. This would clarify issues around liability, indemnity, and licensing for emerging activities such as in-orbit refuelling and space debris removal.

Damani said that regulatory uncertainty can delay projects by up to 24 months, which increases risk-adjusted discount rates and forces massive valuation discounts.

Institutional risk sharing

Space is an unforgiving environment where failure is a statistical certainty. Historically, the government has acted as a sovereign backstop, with mission failures absorbed by the exchequer. However, as the private sector takes on national ambitions, this risk cushion needs to be extended. The current insurance market for space is nascent in India, making it difficult for startups to find affordable coverage without a proven heritage of successful launches.

Masook of SpaceFields argued that the government must address this asymmetry to encourage private risk-taking. He observed, “Today, deeptech entrepreneurs are expected to shoulder highly asymmetric risk—years of R&D, regulatory burden, competitive pressure and capital lock-in—without commensurate institutional risk-sharing... Balancing the reality of risk with the need of insurance requires collaborative risk sharing, as well as sovereign reinsurance participation.”

Reducing launch risk is another priority. Siddharth Jena, Founder and CEO of Akashalabdhi, emphasised that getting to orbit for the first time is the biggest hurdle for new entrants. Akashalabdhi specialises in the development of expandable space habitats and dual-use defence technologies.

He suggested that the budget should provide guaranteed access to subsidised or shared launch opportunities for technology demonstrations, particularly for systems related to long-duration missions and space stations.

Strategic mission partnerships

Finally, the budget is expected to pave the way for a deeper integration of startups into flagship national programmes. This includes the Gaganyaan programme, the nation’s first human spaceflight mission, and the Bharatiya Antariksh Station, India's planned indigenous modular space station, being developed by the Indian Space Research Organisation (ISRO). Founders are keen to move beyond being simple parts suppliers to becoming module owners and operators.

Jena argued that the Bharat Antariksh Station should be an open national platform. He said, “If Gaganyaan puts Indians in space and the Bharat Antariksh Station keeps them there, this Budget should ensure Indian startups are empowered to help build, fly, and operate that future and not remain spectators... One orbital demonstration is more valuable than years of ground simulations.”

The downstream economy also requires attention, specifically in how satellite data is used in agriculture, disaster management, and defence. Krishanu Acharya, Co-founder and CEO of Suhora Technologies, believes the budget should bridge the gap from pilots to commercial scale.

Acharya remarked, “The budget allocations should unlock government procurement in ministries like agriculture, disaster management and urban development, with dedicated lines for EO analytics, faster small-ticket contracts and multi-year programmes earmarking private spacetech solutions over legacy pilots. We also expect the budget to significantly increase defence sector allocations for satellite data analytics.”

The consensus among stakeholders is clear, the era of demonstration is over, and the era of adoption must begin.