Policy reforms, risk capital fuel India's fast-growing space-tech ecosystem

Space-tech funding has surged as policy reforms, government-backed risk capital and access to Isro infrastructure allow private companies to move from development to commercial deployment

From Indian Institute of Technology (IIT) Bombay-incubated startup InspeCity Space Laboratories raising ₹100 crore in a pre-Series A funding round to Garuda Aerospace closing its pre-IPO funding, India’s space-tech aspirations are skyrocketing.

The factors propelling the country’s ambitions include policy reform, infusion of government-backed capital, institutional support, and growing private sector confidence. 

Data from market intelligence platform Tracxn shows that ecosystem funding, across equity rounds, has surged from just $48.4 million across 16 rounds in 2021 to $332 million across 37 rounds in 2026. The number of space-tech startups has risen from just one in 2014 to more than 400 in 2026, according to data from the department of space.The change is not only visible in the numbers. 

Skyroot Aerospace’s Vikram-1 has become the first privately developed orbital launch vehicle to successfully reach low earth orbit, demonstrating that private companies are moving from engineering and experiments to major space missions. 

Changing trajectory 

Dushyant Singh, managing director of Playbook Partners, a venture capital (VC) firm that invested in Skyroot, said the government’s decision to open up the space ecosystem to private enterprises has fundamentally changed the industry’s trajectory. 

This ecosystem includes the Indian Space Research Organisation, or Isro, which catapulted India’s post-Independence foray into space, uniquely for a developing country. 

“Access to Isro’s launch infrastructure, testing facilities, and technical expertise through IN-SPACe has made companies like Skyroot possible,” he said. 

IN-SPACe is the government’s single-window agency for all space-related activities in the private sector.  Singh added that the country’s space economy is projected to grow from about $8 billion to $44 billion by 2033. 

Union Minister of State (independent charge) for Science and Technology and Space Jitendra Singh, in comments made earlier this year, highlighted the revenue potential from launching foreign satellites. Of the 434 foreign satellites launched by Isro so far, he said, 399 were launched after 2014. 

The Economic Survey 2025-26 said commercial launches have been a “key export source”, with India launching satellites for 34 countries between 2015 and 2024. 

Commercialisation has also been strengthened through Isro’s commercial arm NewSpace India Ltd, whose revenue rose from ₹322 crore in 2019-20 (FY20) to ₹2,940 crore in FY23, with further expansion projected in FY25 to ₹3,246.1 crore, the Survey said. 

Convergence and support 

A VC firm, Unicorn India Ventures, has invested about ₹56 crore across four space-tech companies — SatLeo Labs, OrbitAID Aerospace, TakeMe2Space and Hathor Rockets. Its founder and managing partner Bhaskar Majumdar describes the shift in the investment landscape as a convergence of policy, capital, and institutional support. 

Majumdar said dedicated government risk capital is helping create the conditions for companies to survive the long development cycles required to move from technology readiness to commercial deployment. 

The ₹1,000 crore space VC fund managed by SIDBI Venture Capital, another public sector company, is designed to

provide risk capital to the sector, while the government’s ₹1 trillion Research,Development, and Innovation (RDI) fund provides long-horizon financing for deep-tech in space and several other sectors. 

With the RDI fund’s launch in November last year, the government aims to catalyse research-driven entrepreneurship, enable technology self-reliance, enhance national strategic autonomy in critical technologies and sectors, and drive sustainable and inclusive economic growth. The primary objective is to encourage the private sector to scale up RDI in sunrise domains and other sectors relevant for economic security, strategic purpose and self-reliance. 

For Nat Malupillai, group chief executive officer (CEO) of IIT Madras Research Park, three forces are coming together: the development of sovereign capabilities, patient capital, and the opening of the sector to greater collaboration between startups and established institutions. 

Malupillai said startups are working not just on launch vehicles and satellites, but also propulsion, avionics, spacecraft, earth observation, communications and space-based applications. At the research park, Malupillai pointed to firms such as Agnikul Cosmos, Daloft Aerospace, GalaxEye Space Solutions and Inbound Aerospace as companies that have been incubated there.  The government’s signal is unambiguous: That private companies will be central to the country’s ambitions in space. Prime Minister Narendra Modi met CEOs of 20 space-tech startups in August this year, underlining the growing importance being attached to the sector. 

Under the RDI fund, the government has so far selected 22 companies. Of these, seven to eight are space-tech firms, including The ePlane Company, Agnikul Cosmos, ideaForge, Dhruva Space, Manastu Space and GalaxEye. The rest span quantum computing, robotics, electric mobility, bio-technology, healthcare, climate technology and digital technologies. 

More than money 

For startups, however, government support is about morethan money. IN-SPACe has emerged as a bridge between private companies and the country's established space infrastructure and expertise.   

This has allowed companies like Bengaluru-based The Guild (formerly EtherealX), to work on building Razor Crest Mk-1, a fully reusable medium-lift launch vehicle. The Guild is currently transitioning from system development to hardware/system testing, with its work extending beyond the rocket itself into indigenous propulsion, engine-testing infrastructure, advanced manufacturing and the infrastructure required to make reusable launch systems commercially viable.   

Other companies like Agnikul Cosmos are building private launch ecosystems, focusing on indigenous propulsion,

reusability and the future of commercial launches. 

Inbound Aerospace cofounder and chief operations officer  (COO) Vishal Reddy said access to the ecosystem has become substantially easier for young companies. “IN-SPACe has been very helpful in propping up space startups with various types of support – regulatory, policy, access to testing infrastructure and access to mentorship.” Inbound has raised $1 million from VC firms, including Speciale Invest and Piper Serica, while also receiving a grant of ₹20 lakh through its incubator and pre-incubator. 

The company is deploying the capital for ongoing R&D and engineering work across spacecraft architecture, precision landing systems, thermal protection, propulsion and subsystem validation. It’s developing an autonomous, unmanned, recoverable spacecraft for customers to conduct in-orbit technology demonstrations, microgravity research and in-space manufacturing.

Inbound has also recently signed a memorandum of understanding with Australia-based Space Angel Group that allows it to carry out high-altitude testing activity in Australia, where access to large swathes of uninhabited land is ideal from a safety point of view and for precision landing and recovery systems. 

 

New Delhi-based deep-tech defence and aerospace startup D-Propulse Aerospace, meanwhile, is working on an air-breathing rotating detonation engine (RDE) technology, which, the company said, would be suitable for a range of high-speed munitions, including high supersonic cruise missiles. “We are also progressing rotating detonation rocket engines for terrestrial and space-launch applications,” the company added. 

D-Propulse has raised ₹25 crore in equity. Founder and CEO Saurav Jha sees the broader government architecture as a central catalyst. “Government support to the sector is the chief driver, whether it be in terms of creating the architecture for private participation in the form of IN-SPACe, or encouraging handholding or policy signalling, which reassures both companies and private capital of the size and depth of the market,” Jha said. 

As space-tech startups push the boundaries of indigenous technology and space-faring capabilities, the country’s transition to becoming a leader in the global space economy seems underway. With a robust pipeline of deep-tech innovation, policy backing, and a growing pool of patient capital, the industry is set to secure a significant footprint in the commercial space market over the coming decade.