Spacetech

Union Budget 2024-25: FM Sitharaman Announces Rs 1,000 Crore VC Fund to Boost India’s Space Economy

• ByStartupStory     |    July 23, 2024

Union Finance Minister Nirmala Sitharaman announced the establishment of a Rs 1,000-crore venture capital (VC) fund during her Budget speech on Tuesday. This initiative is part of the government’s broader strategy to quintuple the space economy over the next decade.

“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,” stated Sitharaman, the first finance minister to present the seventh consecutive Budget. This fund underscores the government’s dedication to advancing the Indian space sector.

Catalyzing Innovation in Spacetech Startups

The announcement has been met with enthusiasm from industry leaders. Manoj Agarwal, Managing Partner at Seafund, a deeptech-focused VC fund, remarked, “The VC fund will work as a strong catalyst for spacetech startups.” He emphasized the budget’s role in integrating macro-economic expansion with targeted micro-economic interventions to stimulate growth in the Space-Technology ecosystem.

Chaitanya Dora Surapureddy, Co-founder and CFO of Dhruva Space, highlighted the strategic importance of this initiative. “The Budget synergises macro-economic expansion with targeted micro-economic interventions, catalysing the growth of the Space-Technology ecosystem, with a pronounced emphasis on bolstering private stakeholders within India’s burgeoning space sector,” he said. “This strategic thrust aims to fortify India’s stature as a leading Space Nation, propelling innovation and fostering a conducive environment for private enterprise to thrive in the Space domain,” he added.

Opening the Space Sector

Since opening the space sector to private players in 2021 and further liberalizing it through the Indian Space Policy 2023, the government has been enabling private enterprises to engage in end-to-end activities. The policy also allows 100% foreign direct investment (FDI), reducing entry barriers.

Anil Joshi, Managing Partner of Unicorn India Ventures, commented on the sector’s growth potential. “The fund of funds for spacetech is a testimony to India’s capability to come up with breakthrough solutions at low cost. This will certainly help spacetech companies to look for much-needed early-stage capital to get started,” he noted.

Projecting Growth in the Space Economy

According to IN-SPACe, the Indian space economy is projected to grow from the current $8.4 billion to $44 billion over the next decade. This expansion is expected to increase India’s share of the global space economy from 2% to 8%.

Vishesh Rajaram, Managing Partner of Speciale Invest, expressed optimism about the government’s commitment. “We strongly believe that a Rs 1,000-crore fund for space startups and the space economy will catalyse India’s dominance in the global space market!” he remarked. Rajaram anticipates that the combination of government support and the FDI policy will attract more investments, both domestic and international, to the sector.

Driving Innovation

Startups such as Agnikul Cosmos, Skyroot Aerospace, Pixxel, Dhruva Space, and Bellatrix Aerospace are expected to lead innovation in space launches and downstream technologies. Moin SPM, Co-founder and COO of Agnikul Cosmos, emphasized the link between space and economic progress. “Space progress is also a part of a country’s economic progress. The correlation between space and economy goes long back and this attestation (formation of fund) from the government for private players is a big boon as it would remove all doubts about the sector itself for all stakeholders of the sector,” he said. “With policy already in play, India’s aspirations from private players in the space industry is getting broader and bigger,” he added.

Increased Budget Allocation

The budget allocation for space technology and applications for 2024-2025 is set at Rs 11,700 crore, up from the previous year’s estimate of Rs 11,000 crore, with revised estimates at Rs 9,706 crore. This increased allocation demonstrates the government’s commitment to supporting the space sector’s growth and innovation.

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