The Union Cabinet, chaired by Prime Minister Narendra Modi, on Thursday approved the setting up of a Rs 1,000 crore venture capital fund exclusive to India's growing space sector. The proposed VC fund under the aegis of IN-SPACe shall have an eventual deployment period of up to five years from the actual date of the start of the fund operations.
It is expected to boost employment in the Indian space sector as a result of supporting startups along the entire space supply chain. The proposed fund is likely to see average deployment amount at around Rs 150-250 crore per year, based on investment opportunities and fund requirements, said the Cabinet.
The indicative range of investment shall be Rs 10-Rs 60 crore, as a function of the stage of the company, its growth trajectory, and its potential impact on national space capabilities. The indicative equity investment range could be at Rs 10 crore-Rs 30 crore for the growth stage and at Rs 30 crore-Rs 60 crore for the late growth stage.
"Based on the above investment range, the fund is likely to support close to 40 start-ups," the Cabinet said.
The government, as part of its reforms in the space sector in 2020, constituted IN-SPACe to promote and oversee private sector participation in space activities. The IN-SPACe had proposed a VC fund of Rs 1,000 cr to aid the growth of the space economy that currently stands at $8.4 billion, targeting to touch $44 billion by 2033.
With nearly 250 space startups emerging across the value chain, timely financial support is important not only for the growth of startups but also to prevent talent loss abroad, said a Cabinet note. The centre's proposal for a government-backed fund will give confidence to investors who can attract private capital, it added, and signal that the government is serious about advancing space reforms.
The fund will play an essential role in driving innovation and furthering economic growth by providing capital and keeping businesses here in India while fast-tracking space technology development, enhancing global competitiveness, and creating an effervescent innovation ecosystem.
With the infusion of capital, the multiplier effect will be created to attract additional funding for later stages of development, instill confidence in private investors, the Cabinet said.
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