India’s space economy: India’s decision to open its space sector to private enterprise was bound to alter the role of the Indian Space Research Organisation. The change has now caused unease within ISRO, prompting the agency to issue a categorical clarification on September 6 that it would neither be privatised nor diminished. The reassurance was necessary, but it does not settle the harder question. India must decide how far private companies should take over the production of proven technologies while ISRO concentrates on research, strategic missions and exploration.
The distinction will determine whether India builds a competitive space industry around ISRO or weakens the institution before that industry is ready.
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India’s ambitions exceed the present size of the sector. IN-SPACe estimated the country’s space economy at $8.4 billion, or about 2% of the global market, when it published its decadal strategy in 2023. It wants the industry to reach $44 billion by 2033, including $11 billion in exports.
That fivefold increase cannot come from administrative liberalisation alone. Space companies require access to capital, testing facilities and long-term customers. India has made progress on regulation. It has yet to create the commercial conditions in which a larger number of firms can survive.
India’s space funding gap
More than 400 space start-ups had been registered by February 2026, according to the Department of Space. Official estimates put cumulative investment at more than $500 million. By July, the government had established a ₹1,000 crore venture capital fund and launched a ₹500 crore Technology Adoption Fund.
Private databases use different definitions and produce higher estimates. Tracxn reported in July that 72 Indian space-tech companies had raised $871 million across 241 funding rounds since 2021. Even by that measure, capital remains concentrated in a small group of companies. Skyroot Aerospace became India’s first space-tech unicorn in May after raising $60 million, taking its total funding to about $160 million.
The number of registered start-ups therefore gives an incomplete picture. Many are still at an early stage, and only a few have attracted the capital needed to build satellites, launch vehicles or specialised manufacturing capacity.
The financing problem is rooted in the economics of space technology. A software company can test a product and revise it at limited cost. A launch-vehicle manufacturer may spend years developing hardware before completing a commercial flight. Satellite companies face long development cycles, demanding certification and the risk that one failed mission will destroy a valuable asset. Technical success does not guarantee a steady revenue stream.
Private investors will finance some of this risk, particularly where companies can sell globally. They are less likely to fund businesses that depend on an uncertain domestic market or sporadic government contracts.
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The state must create demand
The Union government can do more as a customer. Ministries and state governments purchase services that could increasingly be supplied through satellites, including crop assessment, disaster monitoring, mapping and communications. Longer procurement contracts would give companies revenue visibility and make it easier for them to raise debt or equity.
Grants and venture funds help companies develop technology. They cannot substitute for paying customers. IN-SPACe should work with government departments to aggregate demand and publish predictable procurement pipelines. Smaller firms would then have a better chance of competing without depending indefinitely on public subsidies.
India also needs depth across the supply chain. A viable space industry requires component makers and testing companies, but it cannot remain largely a subcontracting base. Indian firms must acquire intellectual property and compete in satellite systems, launch services, Earth observation and space-derived data products. Downstream applications offer the best prospect of recurring revenue because they can serve agriculture, insurance and logistics without requiring every company to own satellites.
The Indian Space Policy 2023 permits private entities to conduct activities across the value chain, subject to authorisation by IN-SPACe. Companies may manufacture and operate space objects, offer communication and remote-sensing services and establish ground facilities. The policy has removed an important legal barrier. Industrial capacity will take longer to build.
A larger role for established companies
Large Indian conglomerates will inevitably participate in this expansion. They have the balance sheets to finance factories and absorb long development periods. They also possess procurement networks and manufacturing experience that most start-ups lack.
Adani Defence & Aerospace illustrates the direction of travel. An Adani-backed company was among the finalists selected for the transfer of production technology for ISRO’s Small Satellite Launch Vehicle. The group has also expanded in defence and aviation. In 2026, it announced aerospace manufacturing partnerships with Leonardo and Embraer, although these agreements are not themselves space projects.
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India will need companies of this size if it wants to manufacture launch systems and satellite constellations at scale. Their entry, however, should not be confused with the privatisation of the national space programme.
Space infrastructure has strategic uses, and concentration creates risks. If a few industrial groups control launch capacity, critical components or access to satellite data, the government and smaller companies could become dependent on private gatekeepers. Technology transfers and procurement contracts therefore require transparent auctions, safeguards against conflicts of interest and conditions that permit more than one supplier to develop capability.
IN-SPACe must promote competition as firmly as it promotes investment. Its regulatory decisions should be published with clear criteria, particularly when public technology or infrastructure is transferred to industry.
India’s space economy: ISRO must remain the system’s anchor
ISRO’s September clarification draws a sensible boundary. Industry will scale mature technologies, while ISRO remains responsible for advanced research, national and strategic missions, space science and frontier capabilities.
The model has already begun to take shape. A consortium led by Hindustan Aeronautics and Larsen & Toubro is producing the Polar Satellite Launch Vehicle. Small Satellite Launch Vehicle technology has been transferred to HAL. These arrangements can release ISRO’s scientists from repetitive production work, provided the agency retains the expertise to design, test and improve the systems it develops.
The risk lies in treating withdrawal from manufacturing as proof of reform. ISRO must retain enough engineering depth to act as an informed designer and customer. A research agency that loses contact with production can also lose the practical knowledge required for innovation.
India should industrialise space without dismantling the public institution that built its capabilities. Private companies can provide capital and manufacturing scale. ISRO must continue to set the technological direction and protect national interests. The success of the reform will be measured by whether it produces more capable Indian firms around a stronger ISRO, rather than a small circle of contractors inheriting public technology.