By Vasudevan Sridharan | 2026-06-02

India’s commercial space industry, once largely confined to the state-run Indian Space Research Organization (ISRO), is rapidly transforming into one of the country’s most closely watched deep-tech sectors.

The shift has been evident in recent years, fueled by industry-friendly policies, private investment, and an increasing appetite for strategic technologies.

A notable surge followed the federal government's 2020 decision to open the sector to private players. This allowed startups and companies access to ISRO’s much-coveted testing and launch infrastructure.

The policy overhaul led to the creation of the Indian National Space Promotion and Authorization Center (IN-SPACe), which acts as a go-between for private companies and the ISRO.

Thanks to these measures, India currently boasts over 300 space startups operating across launch vehicles, satellite manufacturing, propulsion systems, geospatial intelligence and downstream data services.

'Make model' to 'Buy model'

At the center of this new wave are companies like Skyroot Aerospace, the Hyderabad-based startup founded by former ISRO scientists Pawan Kumar Chandana and Naga Bharath Daka.

In early May, Skyroot became the country’s first space-tech unicorn (startup with $1 billion valuation or more) after raising nearly $60 million in fresh funding.

The company drew national attention in 2022 when it launched Vikram-S, India’s first privately developed rocket. It is now preparing for the launch of Vikram-1, which is expected to become India’s first privately built orbital launch vehicle.

Industry experts say the rise of companies such as Skyroot reflects a broader change in how investors and policymakers view the space sector.

"For more than 75 years since our independence, India’s aim has been that we will develop the space sector purely by the government," said economist Susan Thomas, who cofounded the independent research institution XKDR Forum.

Thomas, who coauthored a 2024 policy paper arguing for more privatization of the space industry in India, describes this as the "Make-Approach."

"This becomes a lock-in system, and whatever ISRO builds will remain within ISRO," Thomas told BlueShift.

"The alternative would have been what the US did with NASA," she explained, describing this model as the "Buy-Approach."

"The US explicitly took this position, saying, we use taxpayer money, therefore, we should figure out how there is maximal spillover of the use of this money into the broader economy," Thomas said.

She argues that this contracting out has generated vast "positive externalities."

"When that money went into universities and private firms, it created a lot of innovation that you wouldn't have imagined when you first did that contracting," she observed.

"Perhaps it is time for us to reflect. And to shift from the ‘make model’ to the ‘buy model'."

Startups emerge as serious players

In addition to Skyroot, companies like AgniKul Cosmos, Pixxel, Bellatrix Aerospace, and Dhruva Space are expanding India’s commercial space footprint, making a rapid transition from startups to serious players.

Chennai-based AgniKul Cosmos is developing small satellite launch vehicles, while Pixxel is building a hyperspectral Earth imaging satellite constellation aimed at agriculture, climate monitoring, and industrial analytics.

Bellatrix Aerospace is focused on space propulsion systems, an area considered critical for future satellite mobility and orbital operations.

Several factors are driving growth. One of the biggest has been the government’s push to commercialize the sector while retaining ISRO as the anchor institution for advanced research and strategic missions.

India’s Space Policy 2023 further clarified the role of private industry across launch services, satellite operations, and downstream applications.

Another key factor has been the falling cost of satellite manufacturing and launch technologies, which have significantly lowered entry barriers for startups.

Meanwhile, venture capital firms and global investors also have begun backing Indian space companies more aggressively as geopolitical tensions push countries to diversify strategic technology supply chains.

Jump in space industry funding

Industry funding jumped sharply in 2025, with the Indian Space Association estimating an 84% rise compared to 2024. So far in 2026, the sector has attracted more than $113 million in investments.

But analysts say more action is needed if the Indian commercial industry wants to attract venture capital funding on a large and sustainable scale.

"Venture capital firms, their partners, and limited partners must recognize that conducting business in space necessitates a focus on sustainability, safety, security, and considerate prosperity," said Chaitanya Giri, a fellow at New Delhi-based think tank Observer Research Foundation (ORF).

"Venture capital firms operating within India should acknowledge that the investments they influence and the startups they nurture are Indian enterprises, not Western ones," Giri told BlueShift.

"Their contributions must align with the perspectives of the Indian market, the Indian business community, and India's national strategic objectives and vision."

Early venture capital has favored high-visibility satellite or launch-related projects, rather than the various subsystem components necessary to develop a comprehensive domestic infrastructure.

"Every government expression of interest or tender received responses from nearly all startups in the ecosystem. In football, not all team members run directly behind the ball, but that was the case in India," Giri said.

This is changing with the evolving policy framework, he noted.

Commercial sector's potential

Experts anticipate that the sector’s long-term potential will move far beyond rocket launches. While launch vehicles remain high-profile symbols of capability, much of the future revenue is expected to come from downstream services.

These include satellite communications, Earth observation, AI-enabled analytics, navigation systems, and defense applications. And Indian companies have diverted their attention to those very areas.

The country’s space economy is projected by industry bodies and policy reports to grow from roughly $8 billion at present to about $44 billion by 2033, potentially commanding around 8% of the global market.

Still, challenges persist.

India’s continued dependence on imported semiconductors, radiation-hardened electronics, and specialized aerospace components is a concern in the fast-changing global order and geopolitical uncertainties.

Building deep manufacturing capabilities, robust testing infrastructure, and long-term funding pipelines will be essential if New Delhi wants to emerge as a serious global commercial space power.

For many within the sector, however, the recent momentum is unmistakable.

What was once an ISRO-led program is now evolving into a broader industrial ecosystem -- one that combines startups, strategic technologies, manufacturing, and global capital in ways that were almost unimaginable a decade ago.