Union Cabinet approves Rs 1,000 crore Venture Capital fund for space sector startups

The Union Cabinet, chaired by Prime Minister Narendra Modi, has given approval for the establishment of a Rs 1,000 crore Venture Capital Fund dedicated to supporting startups in India's growing space sector.

The fund, which is to be managed under the aegis of the Indian National Space Promotion and Authorisation Centre (IN-SPACe), aims to accelerate innovation, retain domestic talent, and boost India's global competitiveness in space technology.

Fund allocation and deployment

The approved Rs 1,000 crore fund will be deployed over a five-year period, with an average annual allocation ranging between Rs 150 and 250 crore.

The deployment plan will begin with Rs 150 crore in the financial year 2025-26. In subsequent years, from 2026-27 to 2028-29, the allocation will increase to Rs 250 crore per year.

The remaining Rs 100 crore will be deployed in the financial year 2029-30, completing the total fund distribution. The phased deployment approach ensures that investment is spread out over time, aligning with the evolving needs of the space startups that the fund is designed to support.

Investment strategy and impact

The fund is expected to support approximately 40 startups, with individual investments ranging from Rs 10 crore to Rs 60 crore.

For companies in the early growth stage, the investment could reach up to Rs 30 crore, while late-stage growth startups may receive funding between Rs 30 crore and Rs 60 crore. These investments will help startups across the entire space supply chain, including upstream, midstream, and downstream segments.

The fund will act as a catalyst for attracting additional private investment, particularly for later-stage developments, thereby ensuring sustained growth and innovation in the space sector.

Role of IN-SPACe

IN-SPACe, an agency established by the Government of India to promote private sector participation in space activities, will oversee the management of the venture capital fund.

The agency, which has locations in Bhopal and Ahmedabad, was launched in 2022 with the mandate to support space startups and facilitate the growth of India's space economy.

IN-SPACe will be crucial in identifying potential startups, managing investments, and fostering a vibrant innovation ecosystem within the space sector.

Broader economic and employment impacts

The establishment of the Rs 1,000 crore Venture Capital Fund is not only expected to advance space technology but also to contribute to India's broader economic goals.

The fund is designed to help India achieve a five-fold expansion in its space economy over the next decade.

By supporting space startups, the fund will promote job creation, directly in high-tech sectors like engineering and software development, and indirectly in supply chains, logistics, and professional services.

The initiative aligns with India's ambition to enhance its global competitiveness in the space sector while promoting the vision of Atmanirbhar Bharat, which focuses on self-reliance and indigenous development.