India, with a population of over 1.4 billion, is one of the world's most populous countries, having recently surpassed China in this regard.

Despite its large population, India's GDP is approximately $3.5 trillion, which is significantly lower than that of China, which has a GDP nearing $15 trillion. This disparity highlights the challenges India faces in terms of economic output per capita. The country's economic constraints limit its ability to allocate resources across all sectors as desired, leading to prioritisation of investments.

Currently, India's space industry is experiencing a sharp decline in funding, with a 55% drop in 2024 to $59.1 million, largely due to the global investment slowdown. This downturn was somewhat anticipated given the global economic conditions. While a space industry is not essential for every country, India's ambition to become a global superpower makes its involvement in space exploration crucial.

The Indian government has shown commitment to the space sector through budget allocations and initiatives like the Indian National Space Promotion and Authorisation Centre (IN-SPACe), which facilitates private sector participation. The recent Union Budget for 2025-26 allocates significant funds to the Department of Space, reflecting the government's strategic focus on space technology and exploration. Despite these efforts, the space industry faces challenges in securing substantial investments, emphasising the need for robust funding mechanisms to support start-ups and innovation.

This downturn aligns with a broader 20% global decrease in space sector investments. Despite this setback, India's space achievements, such as the Chandrayaan-3 lunar mission and the Aditya-L1 solar probe, have positioned the country as a notable player in global space exploration.

To break down the specifics, the Indian government remains committed to bolstering the sector, as evidenced by the allocation of ₹13,416.20 Crores for the Department of Space in the Union Budget 2025-26. This includes initiatives to enhance private sector involvement and geospatial infrastructure, reflecting the government's strategic focus on space technology.

Additionally, a ₹10 billion fund was approved in October 2024 to support space start-ups, aiming to increase India's share of the global commercial space market by 2033.

However, challenges persist, including limited early-stage funding for start-ups and a shortage of specialised talent in space technology.

To address these issues, India plans to expand domestic manufacturing of satellite components and establish more educational institutions focused on space technology.

Strengthening global collaborations and promoting ride share missions could also help make satellite launches more affordable for start-ups.

Despite these challenges, industry experts believe that investment activity may pick up as leading companies approach critical milestones in 2025.

India's Space Sector Growth

Over the past decade, India's space sector has experienced significant growth, largely driven by the Indian Space Research Organisation (ISRO). ISRO has made notable advancements in satellite technology and commercial launch services, positioning India as a major player in the global space industry. The Indian government recognised the potential of the space economy early on and implemented strategic measures to support its development. However, progress in this field is inherently slow due to the high level of expertise and substantial financial resources required.

Initially, investors were optimistic and willing to be patient, but recent data indicates a concerning decline in new investments. In 2024, funding for India's space companies plummeted by 55% to $59.1 million from $130.2 million in 2023, marking a sharp drop that is unusual for a healthy industry.

This sudden decline suggests that investor confidence may be waning, possibly due to global economic instability. Investors typically expect returns on their investments within a 5-10 year time frame, but the current global situation has led some key investors to reassess their commitments. Despite this setback, industry experts anticipate a potential pickup in funding in 2025 as leading companies approach critical milestones.

The Indian government has also taken steps to support the sector, including approving a fund to support space start-ups and planning to expand India's share of the global commercial space market by 2033.

In the broader context, India's space sector has contributed significantly to the national economy, adding $60 billion to GDP and generating 4.7 million jobs over the past decade. The sector is projected to continue growing, with India aiming to increase its share in the global space economy from 2% in 2021 to 8% by 2030 and 15% by 2047.

Despite current funding challenges, the long-term potential of India's space industry remains substantial, driven by government support and private sector innovation.

Space-Tech Start-Ups

India's space start-ups are facing significant challenges due to a sharp decline in funding, largely attributed to the global investment slowdown. This downturn has been anticipated given the economic constraints and the dynamic nature of technological investments. Despite the growth in the global NewSpace market, Indian start-ups have struggled to find their footing, primarily due to the unavailability of adequate funding. Most of these companies are bootstrapped with founder capital, and only a few manage to secure small grants, unlike their counterparts in countries like the U.S., where programs like NASA's SBIR and STTR provide substantial support.

The Indian government has taken steps to support the space sector, such as establishing the Indian National Space Promotion and Authorization Centre (IN-SPACe) in 2020, which has attracted private sector participation and created numerous start-ups focused on satellite manufacturing and space-based applications. However, recent statistics show that these companies are now receiving less than half of their previous investment levels, leading to a rapid decline in funding.

To address these challenges, the government has initiated measures like the ₹500-Crores Technology Adoption Fund (TAF) by IN-SPACe, which provides financial support to start-ups and MSMEs to develop commercially viable products. This fund aims to promote domestic space technology development and reduce dependence on imported solutions.

Additionally, stakeholders are advocating for more robust funding mechanisms, such as a dedicated space venture fund and production-linked incentives, to ensure sustainable growth and innovation in the sector.

Given the strategic importance of the space industry for India's long-term goals, the government is likely to intervene to support these start-ups. While such intervention may not align with capitalist principles, it reflects the government's commitment to maintaining momentum in the space sector. Restructuring and potential government support are inevitable as the industry navigates these financial challenges.

Conclusion

India is aggressively pursuing its ambition to become a powerful nation, with significant emphasis on developing its space industry. Despite any recent fluctuations in investment, key companies in the sector are likely to continue their operations as usual, driven by the government's strategic vision and supportive policies. IN-SPACe plays a crucial role in this endeavour by facilitating private sector participation and streamlining regulatory processes. This has led to a surge in the number of space start-ups, from just one in 2014 to over 200 in 2024, with substantial investments pouring in from both domestic and international sources.

India's space program is deeply intertwined with its socio-economic goals, defence strategies, and geopolitical aspirations. The country has achieved notable successes in space exploration, such as the Mars Orbiter Mission and Chandrayaan-3, showcasing its cost-effective yet technologically advanced capabilities. Future plans include ambitious projects like the Gaganyaan human spaceflight program and the establishment of an Indian space station, which will further enhance its space research capabilities and foster international collaborations.

The government has introduced several reforms and initiatives to bolster the space sector, including the Indian Space Policy 2023, which provides a level playing field for non-government entities to participate across the entire value chain of space activities. Additionally, a dedicated venture capital fund of ₹1.000 crore has been approved to support space start-ups over the next five years. These efforts are expected to propel India towards its goal of capturing 8% of the global space market by 2033 and growing its space economy to $44 billion. Despite challenges such as the need for a skilled workforce and a resilient supply chain, India's strategic vision and innovation are poised to drive its space industry forward.

Space Daily