PM Narendra Modi Chaired Cabinet approves establishment of Rs. 1000 crore Venture Capital fund for Space Sector

By R Anil Kumar

• The fund is Strategically designed to advance India’s Space Sector aligning with national priorities fostering innovation and economic growth

• The deployment period of the proposed Rs. 1000cr, VC Fund is planned to be upto 5 years

New Delhi, October 24. The Union Cabinet Chaired by Prime Minister Narendra Modi has approved setting up of Rs. 1000 crore Venture Capital Fund dedicated to Space Sector under the aegis of IN-SPACe.

The deployment period of the proposed fund is 5 years with the average deployment amount to be around Rs. 150-Rs. 250 crore per year.

The fund is strategically designed to advance India’s Space Sector, aligning with national priorities, fostering innovation and economic growth.

The fund aimed at providing key growth potential in the Space Sector like job creation, Supporting Aatmanirbhar Bharat in the Space Sector, Creating a Vibrant Innovation Eco-system, among others, the Fund aims to Strategically position India  as one of the leading Space Economies.

Impact, Including 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 the companies workforce. Each investment helps generate hundreds of direct jobs in fields like,  engineering, software development and 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 helps develop a skilled workforce driving innovation and enhancing India’s global competitiveness in the Space Sector.

Background:

The Government of India led by Prime Minister Narendra Modi, as part of its 2020 Space Sector Reforms, established IN-SPACe to promote and oversee Private Sector participation in Space activities.

IN-SPACe had proposed a Rs. 1000 crore Venture Capital Fund to support the growth of India’s Space economy, currently valued st $8.4 billion, with a target to reach $ 44 billion by 2033.

The fund aims to address 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 to overseas. The proposed government-backed fund will boost investor confidence, attract private Capital and  signal the government’s commitment to advancing Space Sector Reforms.

The fund 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.