India's Space Industry: From Chandrayaan to a $44 Billion Market
When Chandrayaan-3 successfully landed on the lunar south pole, India not only achieved a scientific milestone but also took a significant step towards becoming a major player in the global space industry. This article explores the challenges and opportunities facing India's space sector, from regulatory frameworks to investment and innovation.
Space IndustryChandrayaanInspaceRegulatory FrameworkVenture CapitalReal EstateJun 01, 2025
A recent FICCI–EY study pegs the domestic space economy at $8.4 billion today and sets a 10-year target of $44 billion, or roughly 8% of the global market. Ambition, then, is not lacking; the question is whether law and finance can keep pace with propulsion.
For half a century, India has prided itself on frugal engineering. The Polar Satellite Launch Vehicle (PSLV), built largely in public workshops, has launched more than 330 foreign satellites and earned over a billion dollars in hard currency. However, frugality is an input, not a business model. The global market is shifting from one-off flagship missions to high-frequency launches of small satellites for imagery, navigation, and broadband. The lunar landing may have thrilled the nation, but the next tranche of value will come from constellations orbiting 600 kilometers above cities like Tuticorin, Seattle, and São Paulo.
This shift exposes a legal vacuum. Until Parliament passes the Space Activities Bill, IN-SPACe can grant licenses only by executive order. Investors know that a court challenge, or worse, a liability claim under the Outer Space Treaty, could unravel those permissions. No serious bank will finance a launch vehicle when the cap on third-party damage remains undefined. In a sector where a single mission can cost as much as a small airport, regulatory ambiguity is not a philosophical irritant; it is a balance-sheet event.
The insurance industry is also playing catch-up. Tata AIG introduced an in-orbit third-party liability cover last year, joining New India Assurance in a club that still fits inside a phone booth. The policy excludes the riskiest phase: launch. London underwriters happily pick up that premium, but they charge in dollars and demand collateral. Unless the Centre creates a domestic re-insurance pool—exactly what ISRO recommended after the Antrix–Devas debacle—India’s cost advantage will melt into foreign brokerage fees.
Meanwhile, the venture-capital drought remains real. Skyroot’s $27 million Series B round in late 2023 was hailed as a milestone; SpaceX burns that amount every fortnight on R&D. The government’s Rs 1000 crore seed fund is welcome, but India cannot reach a $44 billion valuation on seed capital alone. The Development Finance Corporation that once underwrote steel and fertiliser plants must now lend to solid-fuel factories and rad-hard chip foundries.
If New Delhi’s policy is hesitant, the states have been anything but. Tamil Nadu has promised 25% capital subsidies for firms locating near the planned Kulasekarapattinam spaceport; Gujarat is carving out a 500-acre avionics park; Karnataka hopes to corner half the domestic space market by 2030. This competitive federalism is healthy, provided it does not degenerate into a race to the bottom on tax holidays. The Union government should publish a scorecard of fiscal incentives to ensure that land deals do not masquerade as industrial policy.
The good news is that engineering talent is not waiting for the Gazette. Last fortnight, Chennai-based Agnikul test-fired India’s first electric-pump semi-cryogenic engine—a 3-D-printed workhorse that will power the Agnibaan orbital launcher later this year. Skyroot already has one sub-orbital flight under its belt and a clutch of contracts for rideshare launches. These firms are the canaries in our cosmic coal-mine: their survival will tell foreign capital whether India is a serious venue for venture bets or merely a low-cost workshop for foreign primes.
A more subtle threat looms in the ether. Megaconstellations such as Starlink and China’s Guowang are crowding the Ku and Ka bands and filling low-Earth orbits with tens of thousands of satellites. Frequencies and slots, once a commons, are becoming the rare earths of outer space. The department of telecommunications, sensibly, has endorsed administrative rather than auctioned allocation for space-com spectrum, aligning India with international practice. But the rules are still in draft form; should they stall, Indian operators could find the best frequencies taken and the rest contested in court.
Liberalised foreign-investment rules soften some of the blow. Up to 74% automatic FDI is now permitted in satellite manufacture and operation, 49% in launch vehicles, and a full 100% in component supply chains. Such openness, however, comes with responsibility; strategic autonomy cannot rest on imported avionic chips whose export requires a waiver from Washington.
The Air India privatisation taught us that technology without commercial discipline ends in bailout. The same lesson applies in orbit. India must treat space as an infrastructure sector—regulated, tariffed, and financed on long-dated paper—rather than a series of prestige projects.
Parliament should pass the Bill in the forthcoming monsoon session, capping operator liability and creating a sovereign backstop to attract private insurers. A “SpaceStack”—open, anonymised satellite data akin to the UPI payments platform—would democratise downstream innovation. And a production-linked incentive for rad-hard semiconductors would close the most dangerous gap in the supply chain.
Space is not a luxury. Precision agriculture now raises yields in rain-fed Vidarbha; flood-mapping saved Kerala an estimated $200 million in 2018; tele-medicine rides satellite links to Ladakh’s remotest hamlets. These are not souvenirs for the science museum but tangible public goods. They justify every rupee the exchequer spends on launch pads and cryogenic engines.
Yet they will endure only if the political class remembers that technology thrives on predictability. Rockets may defy gravity, but investors fear uncertainty. The bill, the insurance market, the venture-capital pipeline—each is a stage of the same mission. If we stumble on any, the others will remain stranded on the launch pad.
The countdown has begun. It is time for the Ministry of Finance and the Department of Space to read from the same mission log. Space is too important to be left to star-gazers alone; it is now the province of economists, insurers, and legislators. The window to turn a science project into a $44-billion industry will not stay open forever. India must ignite policy engines with the same confidence its scientists show in the control room—or risk watching the future lift off without us.
Frequently Asked Questions
What is the current size of India's space economy?
According to a recent FICCI–EY study, India's domestic space economy is currently valued at $8.4 billion.
What is the target for India's space economy in the next 10 years?
The target for India's space economy in the next 10 years is to reach $44 billion, or roughly 8% of the global market.
What is the significance of the Space Activities Bill for India's space industry?
The Space Activities Bill is significant because it will provide statutory teeth to IN-SPACe, the single-window body that licenses and supervises non-government missions, and place India’s space industry on a firm legal footing.
What are the main challenges facing the insurance industry in the space sector?
The main challenges include the lack of a domestic re-insurance pool and the exclusion of the riskiest phase—launch—from existing policies, which are crucial for attracting serious investment.
How are states contributing to the growth of India's space industry?
States like Tamil Nadu, Gujarat, and Karnataka are offering capital subsidies, creating avionics parks, and setting ambitious targets to attract space firms, fostering a competitive federalism in the sector.
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