“Don’t be stingy and give only a pittance to young entrepreneurs,” Mohandas Pai, chairman of Aarin Capital, told the government after Finance Minister Nirmala Sitharaman announced setting up a venture capital fund worth Rs 1,000 crore to boost India’s space sector as part of the Union Budget for 2024-25.
“A Rs 1,000 crore fund for space tech startups is not a big amount. It is just a nominal amount. India is a big country. Why has the government allocated Rs 11.11 trillion capex for the infrastructure sector and only Rs 1,000 crore for space startups? They should have allocated Rs 10,000 crore for the space sector and set up a Rs 50,000 crore fund of funds,” Pai said in a chat with CNBC-TV18.
“It’s a good thing. But why can’t they think big? In 2015, startups got Rs 10 billion in funding and they still donate the same amount every year,” he added. “For months, they didn’t donate any money. Let’s have a $4 trillion economy, pump in capital to grow India and enable these young entrepreneurs to become global giants.”
The central government on July 23 allocated Rs 13,042.75 crore for the space sector as part of the Union Budget 2024-25. The new allocation is up from Rs 12,543.91 crore last year, but just short of the Rs 13,700.00 crore allocated two years ago.
“We remain focused on expanding the space economy five times over the next decade and a venture capital fund of Rs 1,000 crore will be set up,” Nirmala Sitharaman said.
Speaking about what the allocation means for the sector, Vishesh Rajaram, managing partner at Speciale Invest, one of the most active investors in the space since 2018, told CNBC-TV18, “In 2020, we had the Space Policy, and earlier this year we had the API Policy, which gave clarity to this build-out and opened up the framework for international capital entry and participation. The fact that the government is also saying it is ready to inject a certain amount of capital and support private space startups is a very clear message that the Indian space economy has the capacity to grow from $8 billion to around $45 billion in the next 10 years in the global space market.”
On where the Rs 1,000 crore funding would be utilised, Rajaram added: “Geo-sensitivity is going to be very important for India from a space sector perspective. So building launch capability, commercialising satellites, having the capacity to manufacture more satellites to launch into space either from an observation or communications perspective is going to be crucial and I think it will be a good utilisation of this form of capital.”
The venture capital firm has backed space tech startups such as rocket maker Agnikul Komos, satellite manufacturing and Earth observation companies Galaxy Space and Kawa Space, communications company Astrogate Labs and orbital economy Inspectie. Speciale Invest, which has a portfolio of 40 companies and focuses on deep science and enterprise technology, is now set to launch its third flagship fund with a slightly larger haul than its last $38 million fund.
“Looking at the investments being made in the startups that we meet, I think this is a very positive development. And of course, there will be a multiplier effect of more investors looking at this space and coming to the country from overseas. It’s certainly a hope and I will be back,” Rajaram added.
As per government data, the number of space startups has increased from just one in 2014 to 189 in 2023, according to the DPIIT Start-Up India Portal. In 2023 alone, 53 new space tech startups joined the ecosystem. In fact, to further drive this, IN-SPACe has launched a pre-incubation entrepreneurship development program.
Investment in Indian space startups increased to $124.7 million in 2023. In 2023, Skyroot Aerospace, which rose to fame by launching India’s first private rocket, raised $27.5 million in a pre-Series C round led by Temasek.
According to IN-SPACe, driven by increasing FDI, public-private partnerships, advanced technologies, and upcoming incentives, India’s space economy could reach $44 billion over the next decade from $8.4 billion today. This growth could help India’s share of the global space economy quadruple to 8 percent from the current 2 percent.
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