Union Budget 2024-25: Government Announces Venture Fund of Rs. 1,000 Crore to Expand Space Economy

By R Anil Kumar

• Finance Minister Nirmala Sitharaman announced a Rs. 1,000 crore venture capital fund to give a push to the space economy. “With our continued emphasis on expanding the space economy, by 5 times in the next 10 years, a venture capital fund of Rs. 1,000 crore will be set up,” said Sitharaman

• A venture capital fund is proposed to support the growth and development of the space economy in India. This fund aims to provide the necessary financial resources to foster innovation and expansion in the sector

• The Centre aims to increase India’s share of the global space economy five-fold by 2030, reaching 10 per cent from the current 2 per cent.

• The number of space start-ups in India has surged to nearly 200 in 2024, up from just one in 2022, due to the reforms in the space sector.

• Indian space economy is expected to grow to $44 billion by 2033

Bengaluru, July 23. Union Finance Minister Nirmala Sitharaman announced the proposal to set up a venture capital fund of Rs. 1,000 crore dedicated to the space economy. This announcement, made during the Union Budget presentation for the fiscal year 2024-25 on Tuesday, July 23, highlights the government’s commitment to advance the Indian space sector, which gained momentum since the successful Chandrayaan-3 and Aditya L-1 missions last year.

A venture capital fund of Rs. 1,000 crore is proposed to support the growth and development of the space economy in India. This fund aims to provide the necessary financial resources to foster innovation and expansion in the sector.

In 2023, in a stellar display of prowess, India soared to new heights with the successful soft landing of Chandrayaan-3 on the South Pole of the Moon and the successful launch of Aditya-L1, India’s first solar mission.

Among other feats, India now aims to set up ‘Bharatiya Antariksha Station’ by 2035, and send the first Indian to the Moon by 2040.

Earlier this year, the Ministry of Commerce and Industry has announced a review of the Foreign Direct Investment (FDI) Policy on the space sector in India.

Indian space startups have become a strong pillar for the private space industry in the last decade, especially after the landmark move to open the Indian space sector to private companies in 2020.

Experts in the Field are of the opinion that the Rs. 1,000 crore fund of funds for space tech is testimonial to India’s capability in coming up with breakthrough solutions at low cost.

This will certainly help space tech companies to look for much needed early stage capital to get started. This will certainly help mobilise over Rs. 4000 crore, great move, they say.

Alongside the fund, the government should look at the Intellectual Property regime. The much overdue Patent Policy needs to come out soon to enable maximisation of R&D Fund.

Indian space economy to grow to $44 billion by 2033

The Indian space economy is expected to grow from its current $8.4 billion (2-3 per cent of the global space economy) to $44 billion by 2033.

The private sector is anticipated to play a crucial role in achieving these growth targets. The sector is expected to independently handle satellite manufacturing, launch vehicle manufacturing, provide satellite services, and manufacture ground systems. The government’s vision includes a significant shift towards private sector-led initiatives to boost the space economy.

The year 2023 saw investment in Indian space start-ups increased to $124.7 million, highlighting growing interest and confidence in the sector following successful space mission by Indian Space Research Organisation (ISRO) that brought international attention to India. The Centre aims to increase India’s share of the global space economy five-fold by 2030, reaching 10 per cent from the current 2 per cent.

By 2047, the target is to achieve a 15 per cent share in the global space economy, Union Minister of State (Independent Charge) Science & Technology Jitendra Singh had said earlier this year.

The Economic Survey 2023-24 Vision about space sector

The Economic Survey 2023-24, released on the eve of the Budget on Monday, July22, reveals that India currently operates 55 active space assets, including communication satellites, navigation satellites, scientific satellites, meteorological satellites, and Earth Observation satellites. These assets play a crucial role in various applications, from communication to weather forecasting and scientific research.

More than 300 Indian entities have submitted 440 applications to the Indian National Space Promotion and Authorisation Centre (IN-SPACe) as of January 2024, seeking support in various aspects of the space sector.

Meanwhile, non-governmental entities have signed 51 memorandum of understandings (MoU) and 34 joint project implementation plans for space activities.

Indian space economy: Startups and private ventures

The number of space start-ups in India has surged to nearly 200 in 2024, up from just one in 2022, due to the reforms in the space sector.

Private companies such as PixxelSpace, Digantara, Dhruva Space, Azista BST Aerospace, and Tata Advanced Systems Limited have developed satellites and functional payloads for operations in outer space.

Among public-private partnerships, Hindustan Aeronautics Ltd and Larsen & Toubro have been selected for the end-to-end production of five Polar Satellite Launch Vehicles (PSLVs). This collaboration aims to enhance India’s capabilities in satellite launch technology.

Additionally, ISRO has expanded its launch vehicle fleet, adding the Launch Vehicle Mark-3 and the Small Satellite Launch Vehicle to its existing PSLV and Geosynchronous Satellite Launch Vehicle.