Valued at about $ 8.4 billion (around 2 per cent of the global space market), the space sector is projected to expand to  $ 44 billion over the next decade, driven by launch services, satellite communications, earth observation, navigation and a rapidly growing private ecosystem.

As regards private participation, it witnessed investments totalling $618.5 million in March 2026, compared to $100.5 million in 2021-22 and $348.5 million in 2023-24. The number of active space startups has reached over 400, and the number of investors has grown from early-stage investors to include sovereign wealth funds, global asset managers and strategic corporates.

Capital needs skilled teams to deploy it well, and both need a policy and regulatory environment that keeps evolving as quickly as the technology does

 

 -Suyash Singh, Co-Founder & CEO, GalaxEye

The sector is also starting to exhibit commercial and technological skills. There are over 30 satellites already in orbit by non-government entities, and private companies have proven their capabilities in the launch vehicle, propulsion and Earth observation and satellite systems.

The next challenge is tougher, transforming this expanding capital and technological capacity into sustainable businesses.

Suyash Singh, Co-Founder & CEO, GalaxEye, told The Secretariat that the biggest challenge for India’s private space sector over the next five years will be getting funding, talent and policy to advance together.

“If I had to pick one, I'd say it's the alignment of funding, talent, and policy moving at the same pace. Capital needs skilled teams to deploy it well, and both need a policy and regulatory environment that keeps evolving as quickly as the technology does. Getting all three moving together consistently is the real challenge,” Singh told The Secretariat.

The Funding Gap

The funding problem for investors is no longer about high-risk investments or a shortage of funds but getting startups to prove that their technology is viable as a business.

“The key challenge today is not the availability of capital, but the ability of startups to progressively de-risk their business,” Ajay Modi, Director at Piper Serica, told The Secretariat. Investors are now seeking technology validation in addition to a clear commercialisation roadmap, customer adoption and a business model that is scalable, Modi said.

This is especially critical for the development of spacetech companies, as development cycles can last for several years. It can take a significant amount of investment to build, test and qualify hardware before a startup can start earning significant revenue. This is a structural difference between the sector, which is not able to build and scale products over shorter periods.

Growth-stage investment is thus becoming a significant test to the ecosystem. While such capital has been made easier to access, and is expected to continue getting better as India's spacetech industry grows, only a few startups have reached Series B and above so far, Modi said.

Modi cited data from Tracxn that over 225 spacetech startups have sprung up in India and 78 of them have received institutional funding.

Nirmal K Minda, President, ASSOCHAM, told The Secretariat that startups caught between early technology development and commercial deployment face the greatest difficulty in raising capital.

“Capital is flowing mainly to companies nearing launch or satellite deployment; startups in the middle stage without a clear revenue path are struggling to raise,” Minda said.

Minda also noted that the space sector suffers from the mismatch of long gestation period with the shorter investment and exit time of the majority of domestic VC funds. He claimed that one would need to do more to move to a deeper level of participation from insurers and pension funds and larger domestic investors to better develop the growth stage capital.

Can State Capital Help?

The government has taken some steps to overcome the financial and commercialisation problems.

These include a ₹1,000 crore Venture Capital Fund for space startups and a fund of ₹500 crore for the development, demonstration and commercialisation of indigenous space technologies: Technology Adoption Fund. The government has also relaxed the Foreign Direct Investment (FDI) norms, given access to Indian Space Research Organisation (ISRO) infrastructure and technology inputs and set up mechanisms for technology transfer.

The government has also pledged to create an Indian National Space Promotion and Authorisation Centre (IN-SPACe)Technical Centre to provide low-cost testing and simulation services, and plans to promote the setting up of space manufacturing clusters by states to boost space supply chains and investment.

These measures are viewed as a catalyst and not a substitute for private capital by industry.

While the VC Fund will not be able to cover the long-term capital needs of the sector, Modi said that the fund will help de-risk innovation at its early stages and build investor confidence.

The government-backed funds should promote private and institutional investors to become more active, Minda said.

“The fund isn't meant to carry the sector on its own but to get the private and institutional capital comfortable following in,” Minda said. As startups progress to commercialisation, the difference will grow even more significant since the funding needs of companies can increase rapidly as manufacturing, testing, launches, and operations will all be in need of capital.

The Talent Crunch

A funding problem is closely related to another constraint: specialised talent.

India already has a good number of engineering graduates, but there is a need for expertise in highly specialised and mission-critical systems for the private space industry.

“The larger challenge is the availability of experienced talent in specialised areas such as propulsion, avionics, embedded systems, satellite systems engineering, advanced manufacturing and mission assurance,” Modi said.

The most challenging areas to fill were propulsion engineering, satellite systems integration, guidance and avionics, and space-grade materials science, Minda said.

The shortage is also skewed towards certain specialisations at GalaxEye, like Radio Frequency (RF). Engineering, Payload Engineering, Systems Integration and Testing, and SATs (Satellite Assembly, Integration and Testing).

The government has acknowledged the need for the skills challenge and has announced it has created 14 short-term skill-development courses on various space sector aspects.

But it's not just a matter of how many engineers go into the workforce. Many of the skills and knowledge necessary for space missions are gained from years of experience.

To help young engineers shift to their specialisations on time, there should be more industry-academy partnerships, more apprenticeship programmes, and more collaboration with established aerospace and space organisations, Modi said.

The competition for skilled engineers could thus get more competitive as more startups start to get to real missions.

Policy Needs Certainty

The third part of the equation is policy consistency.

India has recently released the Indian Space Policy 2023, allowed foreign direct investment and developed an authorisation regime for private space activities via IN-SPACe. It has also made ISRO facilities available for wider use and set up test and validation infrastructure.

However, predictable policy is even more important for companies with investments that might take years to earn a return.

Minda stated that consistency in the rules of FDI, government procurement, and approvals under IN-SPACe will affect the companies' confidence in planning long-term investments.

“The thing that actually decides how this plays out is policy consistency, like the FDI rules, procurement, and IN-SPACe approvals staying steady,” Minda said.

The next step, Modi said, would need a more "integrated ecosystem" comprising the Centre, states, industry and academia. There may be cost savings and more rapid commercialisation due to shared testing infrastructure, manufacturing clusters, supply-chain capabilities and a better talent pipeline.

The government is already working on establishing a slice of this ecosystem, including by technology-transfer programmes, the PSLV Orbital Experimental Module (POEM) platform for in-orbit validation and programmes aimed at promoting space manufacturing clusters.

The Scale-Up Challenge

The private space industry has already made significant strides in India. Over 400 startups are currently active, over $600 million in private investment has been made, and non-government organisations have shown orbital capabilities.

The next step will be one of building follow-on commercial enterprises.

That will take patience with capital that can sustain long development processes, investors who will back businesses past their start-up phase, and technical talent and infrastructure to help reduce the cost and time associated with testing and deployment.

Government assistance can help to provide the environment for this expansion to occur, but ultimately it will be private money that must follow.

India’s space story is therefore moving beyond how many startups it can create or how much money it can attract. The bigger test is whether the country can build an ecosystem where capital, talent and policy scale together, allowing its private space companies to move from promising technology to globally competitive businesses.