Union Cabinet Okays Rs 1,000-crore Venture Capital Fund For Space Sector

Union Minister Ashwini Vaishnaw said the deployment period of the proposed fund will be up to five years from the date the operations kick in.

New Delhi: The Union Cabinet, chaired by Prime Minister Narendra Modi, on Thursday approved the setting up of a Rs 1,000 crore venture capital (VC) fund for the space sector, under the aegis of IN-SPACe.

Briefing the reporters, Union Minister Ashwini Vaishnaw said the deployment period of the proposed Rs 1,000-crore VC fund will be up to five years from the date the operations kick in. The average deployment amount could be Rs.150-250 crore per year, depending on the investment opportunities and fund requirements. The proposed break-up will be Rs 150 crore for 2025-26, Rs 250 crore for 2026-27, 2027-28, 2028-29 and Rs 100 crore for 2029-30, totalling Rs 1,000 crore.

Vaishnaw further said the indicative range of investment is proposed to be Rs 10-60 crore, contingent upon the stage of the company, its growth trajectory and its potential impact on national space capabilities. The indicative equity investment range could be Rs 10-30 crore in the early growth stage and Rs 30-60 crore in the late growth stage. The fund is expected to support approximately 40 startups.

The fund is strategically designed to advance India's space sector, aligning with national priorities and fostering innovation and economic growth through key initiatives like capital infusion, retaining companies in India, growing the 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 capital infusion will create a multiplier effect by attracting additional funding for later-stage development, thereby instilling confidence in private investors, retaining space companies in India and countering the trend of Indian companies abroad, accelerating private space industry’s growth to meet the goal of a five-fold expansion of the Indian space economy in ten years and drive advancements in space technology to strengthen India’s leadership through private sector participation.

The proposed fund is expected to boost employment in the space sector by supporting startups across the 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 generate jobs but also develop a skilled workforce, driving innovation and enhancing global competitiveness in the space market.

The Centre, 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 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 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 the brain drain.

The proposed 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 invest in private equities.