The Finance Minister in the Union Budget 24-25 today talked about a Venture Capital Fund of ₹1000 crore will be set up for the Space Sector in the country. This is a boon to the Space Startups of India as the number has drastically increased from just 1 in 2014 to 190+ in the year 2024. This fund will help in taking the space economy five times that of now in the next decade.
The significant amount of budget that was allocated to the Indian Space Sector at the interim budget at the start of the year which saw an increase of ₹500 crore from last year’s allocation of ₹ 12,544 crore, this VC fund will significantly help space tech startups in developing indigenous technology and solutions.
Arpan Sahoo, Co-founder and Chief Operating Officer, KaleidEO says “The establishment of the 1000 crores VC Fund addresses a crucial funding gap in nascent space R&D. This initiative will be transformative in building sovereign capabilities, fostering local IP creation, and driving innovation. I am confident that these funds will enable startups to attract talent, establish local facilities, and develop export potential for the next decade.”
“As the Indian economy and startup ecosystem, particularly the NewSpace sector, continue to grow, the consistent revenue generation and performance of space tech startups will be vital in reinforcing the Government’s confidence in the Indian NewSpace ecosystem.”
This fund will tackle the challenge highlighted in the Economic Survey of the adoption of space technology. It will enable space startups to accelerate the adoption of these technologies.
Kannan K, Co-founder of Augsense Lab, commented “The venture fund dedicated to the space economy sends a strong signal about the government’s recognition of this sector’s importance. The allocation for research and development is also a positive step, though we eagerly await further details. The space economy stands to benefit from the budget’s focus on agriculture, mining, and shipping. Overall, this is a commendable mid-year budget.”
Growth of Space Startups
The economic survey 23-24 highlighted the fact that India currently operates 55 active space assets that include EO satellites, Meteorological Satellites, navigation satellites and communication satellites. All these satellites play a very important role that ranges from earth observation to communication to weather forecasting.
Sanjay Nekkanti, CEO & Co-founder, of Dhruva Space, “Over the last 24 months, Dhruva Space launched 8 of the 24 IN-SPACe-authorized payloads to Space across 4 missions. We will continue to offer bespoke mission offerings through our Launching Expeditions for Aspiring Payloads (LEAP) hosted payload missions for the global market. As a payload- and application-agnostic full-stack company, we are poised to capitalize on the dynamic Indian and global markets, driving innovation and delivering impactful solutions.”
Over 300 Indian organizations have sought support from IN-SPACe by submitting 440 applications as of January 2024, highlighting the growing interest in the country’s space sector. Additionally, non-governmental entities have demonstrated their commitment to space activities by signing 51 MoUs and 34 joint project implementation plans.
Vipul Singh, CEO & Cofounder, of AEREO, further added, “The 2024 Union Budget marks a pivotal moment for India’s drone industry. It’s important to streamline national investments in large capital assets if we plan to double down on industrial growth. Drone-based solutions for planning and progress monitoring offer a strategic advantage, ensuring projects are completed on time and within budget. Most importantly, incentivizing drone solutions would strengthen two critical visions — building robust infrastructure and making India a Global Drone Hub.”
Positive Start, Yet a long way to go
The interim budget earlier this year had extended tax incentives for these space startups and investments backed by sovereign funds to give them benefit from tax relief. This Angel Tax removal announced in this budget helps with eliminating the negative effects on foreign investments which thereby will help support these startups in the long run.
Arup Dasgupta, Managing Editor, of Geospatial World, said, “The Space budget is focused on sustaining current activity rather than any breakthroughs. The ₹1,000 crore venture capital fund is a start, but the government needs to recognize that globally, governments play crucial roles as both anchor financiers and customers. The removal of the Angel Tax is a positive step. This, along with existing relaxations in FDI, will attract foreign Angel investors. The emphasis on digital mapping of land records and housing will create good opportunities for downstream companies to utilize space technology in these areas.”
With the increased funding, the union budget has given a boost to India’s Space Sector and with the growth of support for startups by the Government. With sustained support, India’s Space sector can contribute to the growth of the nation economically as well as indigenously developing technology.