SpaceX, space economy, and India

Space is one of the few technology-intensive arenas where India is relevant. It offers a playbook for other sectors

SpaceX’s initial public offering, the largest in history, raised $75 billion with a market capitalisation exceeding $2 trillion. Given the hype and valuation, it is easy to dismiss the company as a bubble. Rather than jumping to conclusions, I went through various sell-side company models to understand the embedded growth expectations and how they justify $3 trillion price targets. I have taken a five-year view to assess what the company could become.  

The first critical assumption is that data centres in space will work, become a low-cost source of computing, and that demand for computing will be strong enough to absorb all the capacity being set up, both terrestrial and orbital. By 2031, analysts think, artificial intelligence (AI) revenue, both compute and intelligence together will reach $440 billion, accounting for about 67 per cent of SpaceX revenues and 70 per cent of operating profits.  

Analysts estimate that SpaceX will put an incremental 20 Gw of orbital data centre capacity in 2031 alone and stop expanding all terrestrial data centre from 2030 onwards. For context, India as a country is expected to have 10 Gw of operational data centre capacity in 2031.  

Analysts are building approximately 3,500-4,000 Starship launches in 2031. This launch cadence is required to fulfil the company ambition of launching over 150,000 satellites per annum by 2031 ( each Starship can carry between 35 and 50 satellites). These satellites are needed to expand the Starlink broadband constellation to 100,000 satellites from 11,000 today, and to put in place the orbital data centre constellations on which the multi-trillion dollar valuation ultimately rests. 

On the Starlink broadband connectivity service, analysts do not give it much credit for being successful with a direct-to-device mobile offering but have the company delivering over $140 billion in consumer and enterprise broadband revenue, with over 150 million active subscribers. 

I am not getting into the Terafab chip business and the newly announced turbine blade businesses, which seem far away. To underwrite a multi-trillion dollar valuation for SpaceX, you have to believe in orbital data centres and a scaled Starlink broadband service. 

The whole thesis ultimately rests on achieving rapid and full reuse of the Starship rocket and bringing launch costs per kg to below $100. The company launched 165 Falcon 9 rockets last year, which are partly re-usable (the Stage 1 booster is reused). Starship is designed to be fully reusable, with both the Stage 1 booster and Stage 2 ship itself being reused, and is designed to carry five to seven times the payload of Falcon 9. 

Starship is still under test and is yet to demonstrate rapid and full reuse. Without rapid and full reuse, there is no path to achieving the launch cadence and costs required to make the orbital data centre plan viable. Thus, the entire company is a bet on the success of the Starship rocket. Without Starship, there is no path to a market capitalisation in the trillions. 

Analysts have the company delivering revenues of over $650 billion, with an operating profit of over $335 billion by 2031. The company itself is projecting revenues of $1 trillion by 2030 (that is 25 per cent of India’s current gross domestic product).

The models have the company generating no free cash flow through 2031, with capex of over $1.76 trillion from 2026 to 2031. Total annual capital expenditure for listed Nifty500 companies in India is about $100 billion. Such is the scale and ambition of SpaceX. 

Studying SpaceX, one gets some understanding of the importance of the space economy. Whether it be communication or surveillance today or data centres, warfare and space-based manufacturing in the future, space will be a critical area of future growth. Within space, both launch capability and satellite design/manufacturing competence will be critical. 

Unlike semiconductors, electrification, renewables or biologics, India actually has the skills to participate in space, with over 400 space startups, a unicorn in Skyroot and visibility as a key player in both launch and satellite systems on the world map. Why do we have a play in space, despite lagging in most other new emerging technologies? 

We have had the vision and ambition to be in space since 1962, with the Indian Space Research Organisation (Isro) providing leadership and building a track record in indigenous frugal engineering. Its 2026 budget is only $1.5 billion versus $25 billion for Nasa. Isro has developed the ability to design, build and launch various types of satellites across all orbits, be it low Earth or geosynchronous.  

It has designed and built over 100 Indian satellites and has launched 434 satellites for more than 36 countries. Isro has provided technical talent and experience across the startup ecosystem and also enabled startups to use its intellectual property, launchpad, testbeds and tracking facilities. Billions of dollars of government-funded infrastructure have been used by the ecosystem at marginal cost. This has significantly lowered the barriers to entry for a space startup. 

Beyond Isro, the government has been extraordinarily forward-thinking and supportive. It operationalised the space policy for the private sector in 2023, has offered funding through a ₹500 crore Technology Adoption Fund along with a dedicated ₹1,000 crore venture capital (VC) fund, and enabled foreign direct investment. The Indian National Space Promotion and Authorisation Centre, or IN-SPACe, was set up under the leadership of Pawan Goenka, and it has been very successful as a single-window agency helping startups navigate government ministries and agencies and develop the space ecosystem. Unlike in other areas, India has managed to put in place a policy framework for space in time. It also has an enlightened nodal-agency-cum-regulator that understands the need to encourage domestic capabilities. Globally, the space economy is still in its infancy, with only two successful launch companies listed even today (SpaceX and Rocket Lab). We are not late. 

The third piece of the puzzle is funding from VCs and private funds. The sector has raised over $900 million to date, with prominent startups such as Skyroot and Pixxel securing more than $150 million each, showing the maturity of India’s funding environment. You no longer need to exclusively go to the Valley for a deeptech startup. You can raise over $100 million to demonstrate the proof of technology and be lossmaking. The ability of these space startups to list is clear. With Skyroot, Pixxel and Agnikul, we have the role models we need to attract more entrepreneurs and funding. All this is a huge change from five years ago, when the only interest of private funds was in consumer technology businesses. Deeptech and high-end manufacturing/defence startups are now fundable within India itself. 

Space is one of the few technology-intensive sectors where India is relevant. This is because of the confluence of long-term government support to develop indigenous capabilities, combined with very progressive policy support to private players and a maturing domestic funding environment. We should take the lessons from our success in space and apply them to other industries where we need to develop capabilities. We can apply the same playbook.

The writer is with Amansa Capital