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

India’s space-tech aspirations are skyrocketing. The reasons propelling the country’s ambitions include policy reform, 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 in 2026 across 37 rounds. At the same time, the number of space-tech startups has risen from just one in 2014 to more than 400 in 2026, according to government data.

 

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 experimentation to major space missions.

 

Playbook Partners is a venture capital (VC) firm that invested in Skyroot. Dushyant Singh, the firm’s managing director, said the government’s decision to open up the space ecosystem to private enterprises has fundamentally changed the industry's trajectory. “Access to ISRO's launch infrastructure, testing facilities, and technical expertise through IN-SPACe has made companies like Skyroot possible,” he said.

 

Singh added that the country’s space economy is projected to grow from about $8 billion to $44 billion by 2033.

 

Another VC firm, Unicorn India Ventures, has invested about Rs 56 crore across four space-tech companies, SatLeo, OrbitAID, TakeMe2Space and Hathor. 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 that 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 numbers behind that capital pool are significant. The Rs 1,000 crore space VC fund managed by SIDBI Venture Capital is designed to provide risk capital to the sector, while the Rs 1 trillion RDI Fund provides long-horizon financing for deep-tech.

 

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.

 

“We are building sovereign capabilities across the value chain,” Malupillai said, adding that startups are working not just on launch vehicles and satellites, but also propulsion, avionics, spacecraft, Earth observation, communications and space-based applications. At IIT Madras Research Park, Malupillai points to companies including Agnikul, Daloft Aerospace, GalaxEye and Inbound Aerospace as examples of this widening base.

 

The government is also signalling that private companies will be central to the country’s ambitions in space. Prime Minister Narendra Modi’s recent meeting with CEOs of 20 space-tech startups underlined the growing importance being attached to the sector.

 

On the policy front, under the Research, Development, and Innovation (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.

 

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

 

Inbound Aerospace co-founder and chief operations officer 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,” he said. Inbound has raised $1 million from VC firms including Speciale Invest and Piper Serica, while also receiving a Rs 20 lakh grant through its incubator and pre-incubator.

 

D-Propulse Aerospace, meanwhile, is working on an indigenous air-breathing Rotating Detonation Engine. The company has raised Rs 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 ISRO handholding or policy signalling which reassures both companies and private capital of the size and depth of the market,” Jha said.

 

“The Indian Space Policy 2023 and IN-SPACe’s single-window authorisation have opened launch, satellite and ground segments to private players and made the sector investable,” added Dinesh Kumar Thangaraj, founder and CEO of Daloft Aerospace. The firm has raised Rs 1 crore from private investors and nearly Rs 30 lakh through government grants. Its indigenous flight-control hardware is already in the commercial market and flying on client drones undergoing DGCA type certification.