India’s aerospace industry is set to grow at twice the pace of the global market, with space startups leveraging state backed funds, forming constructive partnerships with ISRO, to create a globally competitive space ecosystem in South Asia.
In 2026, owing to a set of reforms implemented by India’s Prime Minister Narendra Modi-led government, the number of space startups has increased from just one company in 2014 to more than 400.
A decade ago, space technology was exclusively the business of the state and large corporations. This picture started changing dramatically in 2020, when the Indian government decided to open the space value chain to non-public enterprises, followed by the 2023 Indian Space Policy, which established the broader framework for private sector involvement.
Indian National Space Promotion Authorization Centre (IN-SPACe) became the autonomous single-window agency to authorise private sector’s space activities, and to simplify access to state owned facilities of Indian Space Research Organization (ISRO).
To improve access to capital for startups, Indian government started a venture capital fund, a technology adoption fund, and the IN-SPACe Seed Fund Scheme. IN-SPACe has facilitated $150 million of investments into Indian space startups last year.
A substantial flow of funds from the private sector has followed the reforms in India’s domestic space technology sector, which is currently valued at $13 billion, and it is predicted to more than triple in size to $40 billion in 2030, according to a report published by Arkam Ventures.
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Reasons for Investors’ Confidence
Over the years the total cumulative private investment in this sector has reached $600 million. In 2026, space tech startups have raised nearly $256 million. And in the next five years, up to $3.5 billion of venture capital and private equity investments are forecasted for this sector.
“Capital is making a beeline for India’s space startups because the country can build sophisticated aerospace systems at a fraction of the cost of the U.S. and Europe," said Sanjay Kumar, cofounder of EON Space Labs. "Compared to other nations, India’s engineering talent is deep and manufacturing is cost-efficient."
The Indian government is acting like an anchor customer to facilitate growth of startups, and ISRO is sourcing 80% of equipment in launches from Indian companies.
As India’s space ambitions are beginning to outgrow the capacity of its national space agency ISRO, government is offering access to ISRO developed technology to startups. Space startups are becoming important in the context of Space Vision 2047, for honing technologies required for human space flight (Gaganyaa) by 2027, establishing India’s space station (Bhartiya Antariksh Station) by 2035, and sending a crewed mission to the Moon by 2040.
ISRO’s commercial arm, NewSpace India Limited (NSIL) has executed 83 technology transfer agreements with private sector companies. Using technology transfers, small technology-driven companies are building rockets for carrying payloads, developing satellites, spacecraft systems and offering services built around space infrastructure such as satellite life extension and inspection.
“Providing vital human resource talent, cofounders and important know-how of the sector, ISRO is the nucleus around which the entire space startup ecosystem is growing,” said Immanuel Louis and Suyash Bafna, cofounders of Astrophel Aerospace.
Access to ISRO facilities is enabling companies to move from prototypes to market ready offerings at reduced time and costs. Astrophel Aerospace is currently testing its indigenously developed cryogenic pump at ISRO facilities. The products and services being developed are reducing India’s dependence on foreign technology. For instance, Bellatrix Aerospace has demonstrated indigenous green propulsion technology and is developing space mobility solutions. On the other hand, GalaxEye has launched OptoSAR, a privately built earth observation satellite.
The small tech companies are working to enhance production capacity to offer ISRO alternatives to absorb setbacks without allowing the entire launch schedule to go adrift in a sector, where risks and probability of encountering failures are high.
ISRO’s launch vehicle, Polar Satellite Launch Vehicle (PSLV), is known for its reliability in carrying medium loads of up to 1750 kilograms, and startups are commencing their operations via launch vehicles for payloads on the lighter side, up to 500 kilograms.
At ISRO’s Satish Dhawan Space Centre in Sriharikota, India’s first space tech unicorn Skyroot Aerospace has also managed to send its rocket Vikram 1 into orbit successfully, in its very first attempt on 18 July 2026. Making India only the third country, after the United States and China, to have a private company capable of launching rockets into orbit. Space X, the global leader in space launch technology, needed three failed launches before it finally succeeded with its Falcon 1 rocket in 2008.
Challenges
Despite the progress, there is still room for improvement. Last year India recorded just five orbital launches a year, and the country is still grappling with challenges associated with low number of launch sites, longer waiting period to book launch slots. As the aerospace sector is important for national security, the approvals for starting a space startup can take close to 12 months, thereby delaying projects and raising opportunity costs for global investors and companies that are attempting to scale fast in India.
In seeking funding assistance from ISRO, startups also face additional capital constraints, ISRO’s space budget of approximately $1.5 billion is a fraction of western counterparts, NASA ($24.44 billion) and European Space Agency ($25.63 billion). The private and public sources of funds are also not evenly spread. According to a report by a global investment bank Jefferies, majority of cumulative influx of capital over the years, approximately $539 million, has been confined to only 9 space technology startups.
Global Space Technology Market
Currently India accounts for only 2% ($12 billion approx) of the global space market, which is valued at over $620 billion. A small share for a country with a space program spanning more than six decades.
However, according to the US Department of Commerce the country’s share in the global space market is expected to rise five times to reach 10% within the next 5 to 7 years.
ISRO’s reputation of reliability is bound to help startups compete against well-established U.S., Russian and Chinese companies. India’s ability to build space capabilities with relatively limited capital provides a foundation that private companies can potentially carry into commercial markets around the world.
“Space is, by its very nature, a global endeavour, and advances made by one nation create opportunities for the entire world,” said Pawan K Goenka, Chairman of IN-SPACe.
By 2030 Indian companies are forecasted to be involved in up to 45 launches each year for global customers, manufacture one-third of the world’s earth observation satellites and emerge as major exporter of avionics, Global Navigation Satellite System (GNSS), Satellite Communication (SATCOM) and ground Radio Frequency (RF) systems.
To win the celestial race, India’s space startups need to strongly leverage nation’s unique attributes in software development to cater to downstream market of data mining from satellites. In forthcoming years, India’s gain in global markets will be essential to become forecasted third biggest $44 billion space economy by 2033. Whether the country fulfils this potential will heavily depend on startups’ ability to attain recurring global launches, contracts and reliable satellite services, which can cater to a beach head market in Asia first and later scalable to the rest of the world.