The Indian government plans to set up a venture capital fund with a corpus of Rs 1,000 crore (about $120 million) to back startups in the burgeoning space sector, Finance Minister Nirmala Sitharaman said Tuesday.
“With our continued emphasis on expanding the space economy by five times in the next 10 years, a venture capital fund of Rs 1,000 crore will be set up,” Sitharaman said in a speech as she presented the newly elected coalition government’s first budget.
Sitharaman didn't share any specific details about the proposed fund.
The announcement is in line with Prime Minister Narendra Modi’s strategy of liberalising and commercialising the country’s fledgling space sector, which has been historically controlled by the government. India opened the sector for private launches in 2020.
Earlier this year, the country allowed 100% foreign direct investment (FDI) in manufacturing of satellite systems without any prior approval, as it aims to increase its share in the global space market.
The planned VC fund will help boost equity investment in the space sector, which has seen major privatisation in the last few years. Several startups, including Agnikul and Skyroot, have received venture capital funding from domestic and global investors. The sector benefits from relatively lower cost of production in the country. The two startups have successfully launched homegrown private rockets in space since 2022.
Anil Joshi, managing partner at VC firm Unicorn India Ventures, said the proposed fund is a "great move" and underlines India’s capability in coming up with breakthrough solutions at low cost.
"This will certainly help space-tech companies to look for much-needed early-stage capital to get started. This will certainly help mobilise over Rs 4,000 crore," he said.
Sitharaman also said the government will exempt or reduce custom duties on 25 critical minerals critical for sectors like nuclear energy, renewable energy, space, defence, telecommunications, and high-tech electronics.
