New Delhi: The Indian National Space Promotion and Authorisation Centre (IN-SPACe) was established in 2020 to serve as a single-window clearing agency
for all space operations by Indian entities. This was followed by the establishment of the Indian Space Association (ISPA) in 2021, a common forum for New Space startups in the country to voice their aspirations. The Government of India signalled its ambitions to make India a global leader in the space domain by rolling out the Indian Space Policy in 2023, cementing the role of New Space Startups in India’s astronomical space aspirations.
Dhruva Space offers satellite buses, deployers and ground stations. (Image Credit: Dhruva Space).
We spoke to New Space startups across the country to better understand the budget expectations from the Industry. EON Space Labs has indigenously designed optical payloads, including the Argus and MIRA multispectral optical payloads for satellites and the LUMIRA Day and Night imaging system for drones. Dhruva Space provides full-stack services, including satellite buses, deployers and ground stations. Bellatrix Aerospace has developed green propulsion systems for satellites, as well as the Pushpak OTV, which can be considered a ‘mothership’ for satellites. SatLeo Labs is developing thermal imaging satellites to address a gap in Earth Observation capabilities.
Budget needs to match India’s space ambitions
In 2024, the Government approved a Rs 1,000 crore Venture Capital Fund to encourage New Space Startups across the country. Cofounder of EON Space Labs, Punit Badeka says, “The Rs 1,000 crore Space Venture Capital Fund operationalised through IN-SPACe and SIDBI is welcome, but should be increased. There is also a need to increase the Department of Space allocation beyond ₹13,416 crore to match the scale of India’s space ambitions and competing nations.The government should also create a dedicated Earth Observation PLI Scheme to accelerate private satellite imaging capabilities and setup a fast-track mechanism for ISRO technology transfers to startups with simplified licensing and reduced royalty structures for indigenous commercialisation.”
The need for targeted, strategic initiatives
Director of Space Regulatory and Commercialisation at Dhruva Space, Keyur Gandhi says “We appreciate the Central Government for consistently prioritizing the Space sector and recognizing the importance of private industry in previous Budgets. This demonstrates a clear commitment to building an indigenous Space ecosystem and enabling private players to scale alongside National ambitions. This year, our focus should be on addressing structural cost disadvantages that hinder the economic viability of domestic space manufacturing. Introducing dedicated, granular HSN/SAC codes for space-grade components and services — distinct from general Aerospace or Electronics — would reduce GST burdens, unblock input tax credits, and provide clarity on domestic value addition and import dependence.”
Satellites realised by Dhruva Space. (Image Credit: Dhruva Space).
Operating in the Space Domain is capital intensive, and companies need cash on hand to sustain operations. The Government can take steps to make it easier for New Space Startups to meet their daily business needs. Gandhi explains, “Similarly, extending SEZ-equivalent indirect tax benefits — such as zero-rated GST, duty-free procurement, and streamlined customs — to authorized Space-Tech manufacturers can lower project costs, unlock working capital, and make Indian companies globally competitive. These are not large subsidies, but targeted tax and classification reforms that can meaningfully improve ease of doing business, attract private and foreign investment, and accelerate India’s ambition to scale its Space economy.”
The Government as an anchor customer
The Government is an anchor customer for the sector. Gandhi says, “Funding and procuring multi-application constellations through Data-as-a-Service contracts, rather than asset ownership, would materially accelerate global competitiveness. Parallelly, modernising defence acquisition frameworks and streamlining Space-data adoption across Central and State agencies would unlock scale, revenue predictability, and faster commercialization for Indian Space Tech firms. Dhruva Space is already seeing strong revenue traction, with multiple programmes moving towards execution and award under mechanisms such as the Technology Adaptation Fund (TAF), Satellite Bus as a Service, RDI Scheme, and ongoing initiatives including EO-PPP, iDEX and the Seed Fund Scheme. These early orders and pilot contracts send a strong market validation, demonstrating Government confidence in the capability of India’s emerging Space industry to scale; from being Engineering pioneers to becoming globally competitive technology and solution providers.”
SatLeo labs aims to provide space-based thermal intelligence. (Image Credit: SatLeo Labs).
Co-founder and CEO of SatLeo Labs, Shravan Bhati says, “India’s spacetech ecosystem is entering a decisive commercialisation phase, and the upcoming Budget must prioritise early government purchase orders to help young companies move faster from validation to scale. For payload and satellite startups, importing critical tools and components still requires licences that take 4–5 months, even for government-recognised companies, leading to avoidable launch delays. There is a strong case for single-window, fast-track clearances and smoother customs processes for strategic spacetech imports. Additionally, rationalising taxes and tariffs on specialised space components will significantly ease capital strain and help Indian spacetech startups compete globally and deliver on national space ambitions.”
Project 200 by Bellatrix Aerospace is an innovative satellite designed to operate in Ultra Low Earth Orbit. (Image Credit: Bellatrix Aerospace).
Co-Founder and COO, Bellatrix Aerospace, Yashas Karanam says, “Over the past few years, the space sector in India has grown rapidly across both upstream and downstream segments. Several companies have moved from R&D to global commercialization, while many others are scaling quickly. A key driver of this progress has been supportive policies from IN-SPACe, including FDI, grants, VC funding, and subsidies. Recently, the government has also begun acting as an anchor customer, as seen in the EO constellation program where data and services are being procured from a private consortium of startups. We expect this momentum to continue, with more programs announced and higher funding allocations to strengthen self-reliance in the space and defence sectors.
Increased defence spending
India is accelerating the deployment of 52 spy satellites to cover blind spots identified during the border conflict with Pakistan last year, as part of the Space-based Surveillance-3 scheme. During Operation Sindoor, the Indian Military procured satellite imagery from European and American providers, including Sentinel and Maxar. Karanam says, “With rising geopolitical tensions and space becoming a strategic priority, both national missions such as Chandrayaan and Gaganyaan, and private procurement for space-based defence assets are likely to increase. From a budget perspective, overall defence allocation is expected to grow at a rate higher than the ~7 per cent CAGR seen over the last five years. Additionally, we also expect to see a dedicated defence space budget allocation.”
The DRDO was the first customer for the iBooster (to the front) developed by Manastu. In the background is the Vyom 2U thruster. (Image Credit: Aditya Madanapalle/News9).
Defence exports have grown from Rs 14 billion in 2016-17 to Rs 250 billion in 2025, a 15-fold increase that demonstrates that India has for the first time, become a destination for product innovation. To sustain the momentum, India has to transition from assembling hardware here to indigenous development of the core technologies. Targeted policy measures can provide Indian startups with the necessary boost to become innovators in the strategic defence and space technology domain. The Defence Ministry is seeking a historic 20 per cent increase in capital acquisition budget for the financial year 2026-27. Here it is important for policy frameworks to genuinely empower startups developing core technologies indigenously.
The miniaturised Mira Space Telescope. (Image Credit: EON Space Labs).
The defence establishment is price-sensitive, at the cost of quality. Cofounder of EON Space Labs, Sanjay Kumar says, “While the L1 bidding system is designed to ensure transparency, it has also inadvertently stifled innovation in high-technology sectors. As acknowledged in the Economic Survey 2020-21 and highlighted by the Indian Army’s recent recommendations for Defence Procurement Manual reforms, the L1 system ‘prioritises price over capability, sidelining private firms offering advanced technologies.’ We recommend a mandatory adoption of Quality-cum-Cost Based Selection (QCBS) for high-technology procurements in EO-IR systems, optical payloads, and advanced sensors with technical-to-commercial weightage ratios from 60:40 to 80:20. We also request an Indigenous Content Premium allowing up to 20 oer cent price preference for vendors demonstrating core design and manufacturing capabilities in India, not merely assembly or kit integration along with a Technology Readiness Level (TRL) certification as a prerequisite for indigenous classification, ensuring that ‘Make in India’ truly means ‘Designed and Developed in India’.”
Need to address supply chain vulnerabilities
Cofounder of EON Space Labs, Manoj Kumar Gaddam says, “The Union Cabinet, chaired by the Prime Minister Shri Narendra Modi, has approved the launch of the National Critical Mineral Mission (NCMM) with an expenditure of Rs. 16,300 crore and expected investment of Rs. 18,000 crore by PSUs which should be expanded. The ongoing global germanium market crisis presents both a challenge and opportunity. With prices increasing many-fold since export restrictions from China took effect, India must act decisively and initiate the strategic stockpiling of critical optical materials including germanium, zinc selenide, and rare-earth elements used in IR detectors. R&D incentives for germanium-independent solutions including chalcogenide alternatives and silicon-based LWIR technologies should also be explored and nurtured as alternatives via the The Department of Science and Technology (DST), Government of India, National Mission on Interdisciplinary Cyber-Physical Systems (NM-ICPS), with an outlay of Rs. 3,660.00 crore. Customs duty rationalisation on raw optical materials for defence R&D with end-use certification to prevent diversion is another key area.”
TSAT 1A developed by TATA and Satellogic is capable of capturing videos of targets for up to 60 seconds. The Government and Military are primary customers. (Image Credit: TATA Advanced Systems/Gemini/News9).
The persistent challenges for the sector include an insufficient funding at scale relative to global competitors, structural cost disadvantages from taxation and classification issues, lengthy import clearances, supply chain vulnerabilities for critical materials and procurement biases that favour cost over technological superiority. There is a requirement for increased allocations by the Department of Space, expanded venture capital support, targeted PLI schemes, tax reforms, faster technology transfers and streamined defence acquisitions.
