Union Cabinet approves Rs 1,000 crore venture capital fund for Space sector
- In Reports
- 05:01 PM, Oct 24, 2024
- Myind Staff
On October 24, the Union Cabinet, chaired by Prime Minister Narendra Modi, gave its approval to set up a Rs 1,000 crore venture capital (VC) fund dedicated to the space sector. This fund will operate under the aegis of IN-SPACe (Indian National Space Promotion and Authorisation Center) and aims to support India's rapidly growing private space industry.
According to the official statement, the deployment of this Rs 1,000 crore fund will take place over a period of five years, starting from the actual commencement of its operations. The fund's deployment is expected to range between Rs 150-250 crore annually, depending on available investment opportunities and the funding needs of eligible companies.
The fund will be particularly aimed at startups, with investment amounts ranging from Rs 10 crore to Rs 60 crore, depending on the company's stage of growth and its potential to contribute to India’s national space capabilities. The statement outlines two categories for investment the first one would be Growth Stage, Rs 10-30 crore and Late Growth Stage, Rs 30-60 crore. The fund is expected to support around 40 startups based on the above equity investment ranges.
The newly approved venture capital fund is designed to strategically advance India's space sector, aligning with the country’s national priorities. It aims to foster innovation, strengthen the space economy, and create a vibrant ecosystem by infusing capital into promising space companies. This initiative is expected to support India’s goal of becoming a global leader in space technology and innovation while driving economic growth and job creation.
The fund will serve as a significant boost to the Indian private space sector, helping accelerate the development of space technologies and enhancing the country's global competitiveness. By infusing capital, the fund is expected to create a multiplier effect, attracting further investments for later-stage development of space technologies and ventures. This will instill confidence among private investors and contribute to the growth of the private space industry in line with the goal of expanding India’s space economy fivefold over the next 10 years.
A significant aspect of this initiative is its potential for employment generation. The VC fund is expected to stimulate job creation in the Indian space sector by supporting startups across the entire space supply chain—upstream, midstream, and downstream. This financial support will enable companies to scale their operations, invest in research and development, and expand their workforce.
Each investment from the fund is expected to generate hundreds of direct jobs in fields such as engineering, software development, data analysis, and manufacturing. Indirect employment in supply chains, logistics, and professional services will also see a considerable rise, further driving the growth of the space sector. The fund will not only contribute to job creation but also help develop a highly skilled workforce, positioning India as a strong contender in the global space market.
The fund is part of the broader reforms initiated by the government in 2020 to promote private sector participation in space activities. IN-SPACe, established to regulate and facilitate these reforms, proposed the Rs 1,000 crore VC fund as a critical step to support the burgeoning space economy, which is currently valued at $8.4 billion and aims to reach $44 billion by 2033.
The venture capital fund will address the urgent need for risk capital in the high-tech space sector, where traditional lenders are often reluctant to provide financing. With nearly 250 space startups emerging across the space value chain, the timely availability of financial support is crucial for their growth and to prevent talent loss to other countries.
The government-backed fund will also boost investor confidence, attract private capital, and reinforce the government’s commitment to advancing space sector reforms. The fund will operate as an alternate investment fund under SEBI regulations, offering early-stage equity investments to space startups, thereby enabling them to grow and secure additional funding through private equity investments.
In conclusion, this Rs 1,000 crore venture capital fund is set to significantly enhance the Indian space sector, not only by providing crucial financial support to startups but also by fostering innovation, job creation, and long-term sustainability in this rapidly growing industry.
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