Union Cabinet approves setting up of Rs 1,000 crore venture capital fund for space sector startups

The Union Cabinet, chaired by the Prime Minister Shri Narendra Modi on October 24, approved setting up of Rs 1,000 crore venture capital fund dedicated to space sector, under aegis of IN-SPACe. 

The deployment period of the proposed Rs 1,000 crore VC fund is planned to be up to five years from the actual date of start of the fund operations. The average deployment amount could be Rs 150-250 crore per year, depending on the investment opportunities and fund requirements.  

The indicative range of investment is proposed to be Rs 10-60 crore subject to the stage of the company, growth trajectory and its potential impact on national space capabilities.  

According to an official statement, the indicative equity investment range could be: 

• Growth Stage: Rs 10-30 crore 
• Late Growth Stage: Rs 30-60 crore 

Based on the above investment range, the fund is expected to support approximately 40 startups, the statement added. 

The fund is strategically designed to advance India’s space sector, aligning with national priorities and fostering innovation and economic growth through capital infusion, retaining companies in India, growing space economy, accelerating space technology development, boosting global competitiveness, supporting Atmanirbhar Bharat, creating a vibrant innovation ecosystem, driving economic growth and job creation and ensuring long-term sustainability, the statement added. 

It aims to strategically position India as one of the leading space economies by addressing these points. 

• Capital infusion to create a multiplier effect by attracting additional funding for later-stage development, thereby instilling confidence in private investors. 
• Accelerate private space industry’s growth to meet the goal of a five-fold expansion of the Indian space economy in next 10 years. 
• Drive advancements in space technology and strengthening India’s leadership through private sector participation. 

Employment generation potential 

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.  

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 by fostering a strong startup ecosystem. 

Booster dose

The Union government as part of its 2020 space sector reforms, established IN-SPACe to promote and oversee private sector participation in space activities. IN-SPACe has proposed a Rs 1,000 crore Venture Capital Fund to support the growth of India’s space, economy, currently valued at S8.4 billion with a target to reach $44 billion by 2033.  

The fund aims 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 alternate investment fund under SEBI regulations, providing early-stage equity to startups and enabling them to scale for further private equity investments.