• The Indian government has approved a Rs 1,000 crore venture capital fund to boost the space sector.
• The fund, under IN-SPACe, aims to support around 40 startups and boost employment in the space sector.
• The fund is expected to foster innovation, attract private capital, and boost global competitiveness in the space sector.
• The initiative is a significant step towards enhancing India's global competitiveness in the space sector and signals the government's commitment to advancing space reforms.

The Union Cabinet, chaired by Prime Minister Narendra Modi, has given a significant boost to the Indian space sector by approving the establishment of a Rs 1,000 crore venture capital (VC) fund. The fund, which will be under the aegis of IN-SPACe, is expected to be deployed over a period of five years from the commencement of its operations.

The average deployment amount could range from Rs 150-250 crore per year, depending on the investment opportunities and fund requirements.

The government has proposed an indicative range of investment between Rs 10-Rs 60 crore, depending on the stage of the company, its growth trajectory, and its potential impact on national space capabilities. The indicative equity investment range could be at Rs 10 crore-Rs 30 crore for the growth stage and at Rs 30 crore-Rs 60 crore for the late growth stage.

The fund is expected to support approximately 40 startups, thereby boosting employment in the Indian space sector. This move is part of the government's 2020 space sector reforms, which established IN-SPACe to promote and oversee private sector participation in space activities.

IN-SPACe and the Growth of the Space Economy

IN-SPACe proposed the Rs 1,000 crore VC fund to support the growth of the space economy, currently valued at $8.4 billion, with a target to reach $44 billion by 2033. The Indian space sector has seen the emergence of nearly 250 startups across the value chain. Timely financial support is crucial to ensure their growth and prevent talent loss overseas.

The proposed government-backed fund is expected to boost investor confidence, attract private capital, and signal the government's commitment to advancing space reforms. The fund is designed to foster innovation and economic growth through capital infusion, to retain companies in India, accelerate space technology development, boost global competitiveness and create a vibrant innovation ecosystem.

The capital infusion will create a multiplier effect by attracting additional funding for later-stage development, thereby instilling confidence in private investors.

Job Creation and Future Projections

Each investment could generate hundreds of direct jobs in fields like engineering, software development, data analysis, and manufacturing, along with thousands of indirect jobs in supply chains, logistics, and professional services.

The proposed break-up financial year wise is Rs 150 crore in financial year 2025-26, Rs 250 crore for the year 2026-27, Rs 250 crore for the year 2027-28, Rs 250 crore for the year 2028-29 and Rs 100 crore for the year 2029-30.

The fund aims to address the critical need for risk capital, as traditional lenders are hesitant to fund startups in this high-tech sector. This move by the Indian government is reminiscent of similar initiatives taken by other countries to boost their space sectors.

For instance, in 2015, the US government passed the Commercial Space Launch Competitiveness Act, which allowed American companies to own and sell resources they extract from objects in space.