Comments
The Centre’s decision to set up a ₹1000 crore venture capital fund will be a significant boost for fostering space innovation in India, experts said.
“With our continued emphasis on expanding the space economy by 5 times in the next 10 years, a venture capital fund of 1,000 crore will be set up,” Finance Minister Nirmala Sitharaman said.
India currently accounts for nearly 2 per cent of the world’s space economy. In a bid to bolster its space ambitions India has made concerted efforts to liberalise and privatise the space sector. In February 2024 India allowed 100 per cent foreign direct investment in the manufacture of satellite systems without official approval. The Indian Space Policy 2023 also has an extensive liberalisation framework for private space startups.
Reacting to the Centre’s announcement in the budget, Awais Ahmed, Founder and CEO, Pixxel noted, “The announcement of a 1000 crore VC fund in the Union Budget 2024-25 for the space sector is a ground breaking development. This fund will provide crucial financial support to innovative startups and companies, enabling them to scale their technologies and contribute to India’s space ambitions. Such a significant investment underscores the government’s commitment to fostering a robust and dynamic space ecosystem. It also aligns with Union Finance Minister Nirmala Sitharaman and the government’s vision of expanding the space economy fivefold in the next decade.”
While experts welcomed the VC fund, they added that comprehensive incentives would be needed in the future in order to truly unlock the potential of the space sector. Anil Prakash, DG, SIA-India (an industry association for the space sector) said, “to truly realize this potential, comprehensive support for startups is essential. This includes tax incentives, regulatory clarity, and the government acting as an anchor customer. By enabling space manufacturing through Production Linked Incentives (PLI), addressing pending defence offset obligations, and streamlining procurement processes, we can ensure sustained demand and funding for our burgeoning space economy. This budget provides a leading position to India in the global space landscape,” he said.
Chaitanya Dora Surapureddy, Chief Financial Officer & Co-founder, Dhruva Space highlighted that additional incentives for the startup and the MSME sector will also aide space startups as well. He said, “The Union Budget has allocated ₹1,000 Crores for Venture Capital funding and has proposed to abolish Angel Tax for all classes of investors, to bolster the entrepreneurial spirit across the private Space sector.”
He further that the Centre’s credit scheme for the MSME sector will also be helpful, “The Centre’s call for a Credit Guarantee Scheme, with coverage of up to ₹100 Crores, enables MSMEs, including lean-operating Space companies, to secure term loans for specialised machinery and equipment reducing the burden of providing collateral. It pools credit risks, making loans more accessible. This scheme reduces financial barriers, facilitating the establishment of manufacturing facilities for market-ready products – such as those indigenously manufactured by Dhruva Space – in challenging loan environments, fostering growth and competitiveness in the Space industry,” he said.
Comments
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.