The Union Cabinet on Thursday approved setting up a Rs 1,000 crore venture capital fund dedicated to the space sector under the aegis of IN-SPACe.
The deployment period of the proposed VC fund is planned to be up to five years from the actual date of start of the fund operations.
Information and Broadcasting Minister Ashwini Vaishnaw told newspersons after the Cabinet meeting that the government in the first 100 days of its third consecutive term approved infrastructure projects worth over Rs 9 lakh crore covering all sectors of the economy like highways, railways, Metro services and ports.
The average deployment amount from the VC fund could be Rs 150-250 crore per year, depending on investment opportunities and fund requirements.
The indicative range of investment is proposed to be Rs 10-Rs 60 crore, contingent upon the stage of the company, its growth trajectory, and its potential impact on national space capabilities.
Indicative Equity Investment Range could be Rs 10 crore–Rs 30 crore for the growth stage and Rs 30 crore to Rs 60 crore for the late growth stage. Based on this investment range, the fund is expected to support approximately 40 startups.
As part of its 2020 space sector reforms, the Government established IN-SPACe to promote and oversee private sector participation in space activities.
The Venture Capital Fund proposed by IN-SPACe will seek to address the critical need for risk capital, as traditional lenders are hesitant to fund startups in this high-tech sector.
With nearly 250 space startups emerging across the value chain, timely financial support is crucial to ensure their growth and prevent talent loss overseas.
The proposed government-backed fund will boost investor confidence, attract private capital, and signal the government’s commitment to advancing space reforms.
It will serve as an Alternative investment Fund under SEBI regulations, providing early-stage equity to startups and enabling them to scale for further private equity investments.
Benefits of the fund are expected to be capital infusion to create a multiplier effect by attracting additional funding for later-stage development, thereby instilling confidence in private investors.
There will be retention of space companies domiciled within India & countering the trend of Indian companies domiciling abroad.
The Fund will accelerate the private space industry’s growth to meet the goal of a five-fold expansion of the Indian Space Economy in the next 10 years. The Fund will drive advancements in space technology and strengthen India’s leadership through private sector participation.
The Fund will boost global competitiveness and support Atmanirbhar Bharat.
The proposed fund is expected to boost employment in the Indian space sector by supporting startups across the entire space supply chain —upstream, midstream, and downstream.
It will help businesses scale, invest in R&D, and expand their workforce. 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.
By fostering a strong startup ecosystem, the fund will not only create jobs but also develop a skilled workforce, driving innovation and enhancing India’s global competitiveness in the space market.