India's space economy is taking off — and states want a bigger share of the opportunity

India’s space policy has opened the sector to private players. Now, states like Karnataka are building the platforms to turn ambition into market reality.

The world has opened up to space

The world has opened up to space and not just as a domain of exploration, but as an economic frontier.

The global space economy is already valued at over $600 billion and is projected to exceed $1.8 trillion by 2035, driven by falling launch costs, advances in satellite technology, and the rapid expansion of downstream applications.

This shift is now being reinforced by capital markets. The expected listing of private space companies such as SpaceX signals a new phase, where space is not just strategic infrastructure, but a scalable, investable market.

What was once State-led is now becoming a commercial layer powering industries on Earth.

India’s policy shift: Opening the sector

India has begun to respond to this shift.

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With the Indian Space Policy 2023, the government has opened up the sector to private players, allowing non-government entities to build, own, and operate space assets. The ambition is clear: to grow India’s space economy from roughly $8–9 billion today to nearly $44 billion by 2033, increasing its global share from about 2 per cent to 8 per cent, with a longer-term goal of reaching 10 per cent.

This shift has created a structural change.

India’s ecosystem is already expanding, with close to 200 space startups and over 400 private companies operating across the value chain- from launch systems to downstream applications.

States step in: Karnataka’s play

States are now following this national push to build momentum on the ground.

Karnataka, already the nerve centre of India’s space ecosystem, has taken a lead with its Space Technology Policy 2025–30. The state is aiming to capture nearly 50 per cent of India’s space economy, positioning itself as a hub for space innovation, manufacturing, and applications.

At the centre of this effort is the launch of a Space Technology Centre of Excellence (CoE) in Bengaluru, an initiative of Government of Karnataka.

The CoE: from innovation to industry

The CoE: Space tech to Societal impact, from innovation to industry. The objective of the CoE is not just capability building, but translation.

“The CoE is about creating a stronger innovation-to-industry connect,” said Dr Govindarajan, Director, CoE Space Tech Foundation. “We want to support founders who are building applications in space, but solving for use cases on Earth.”

The model spans the full lifecycle- from skilling and infrastructure to product development, funding, and market access- aiming to move from fragmented capability to coordinated scale and collaboration.

A global race and India’s position

Globally, the race is already underway.

Private players now account for nearly 75–80 per cent of the global space economy, with the United States leading through commercial scale, Europe strengthening public-private partnerships, and China advancing a state-backed but commercially integrated model.

India’s advantage lies in cost efficiency and engineering depth - but its global share remains relatively small, making execution the real differentiator.

From demand to delivery: What startups are navigating

On the ground, demand is no longer the constraint- delivery is.

Companies like SkyServe are building at the intersection of AI and space-derived data, using aerial and satellite intelligence across defence, agriculture, water management, climate tech, and infrastructure.

“The demand landscape has gone up almost 100x,” said Vinay Simha, Founder and CEO of SkyServe. “The question now is how quickly we can adapt to that scale.”

At the same time, a new category of startups is emerging deeper in the stack.

Aule Space, an in-orbit servicing startup, is focused on what happens after assets reach orbit- satellite life extension, inspection, and future in-space operations.

“Launch and satellite data have built the foundation of the space economy,” said Nithyaa Giri, CTO and Co-founder of Aule Space. “The next opportunity lies in maintaining, upgrading, and managing assets once they are in orbit.”

Building this from India is closely tied to ecosystem depth.

“Bengaluru gives us access to strong engineering talent across space, robotics, and electronics, along with suppliers who have worked with ISRO for decades,” she said. “That allows us to build and test hardware quickly.”

Proximity to ISRO’s infrastructure and expertise adds another layer.

“There is deep mission experience here - access to facilities, advisors, and engineers who understand space systems helps us move faster,” she added.

This is reinforced by policy and capital.

“Karnataka’s ambition and its dedicated space policy create a strong environment for startups to build and scale from India,” she said.

Yet, even as capability strengthens, execution gaps remain.

“The biggest bottleneck is moving from prototype to flight-ready hardware,” Giri noted. “Access to shared testing infrastructure can significantly reduce time and cost.”

This aligns with what founders across the ecosystem are seeing.

“Sachetisation is going to define the future of space outcomes,” Simha said. “Customers need to be able to afford what they are buying. Subscription models and pre-processed solutions will make that possible.”

“You also need to move with speed,” he added. “Failure has to be part of the process- not a signal to stop.”

What is emerging is a shift- from bespoke, high-cost systems to scalable, accessible products.

Capital, ecosystems, and the path to scale

Investors are now watching this transition closely.

“The real test is commercialization - can these companies start generating consistent revenues?” said Deepak Daftari, angel investor in Agnikul Cosmos.

As the sector evolves, ecosystems- not just policy- are becoming critical to that outcome.

“Tamil Nadu, for instance, is building around its industrial strengths- automotive, electronics, precision engineering. That allows startups to find suppliers, partners, and customers within the same ecosystem,” he noted.

The implication is clear: the ecosystems that will succeed are the ones that compress the journey from idea to prototype to customer to scale.

A national momentum beyond Karnataka

Karnataka is not alone in this push.

States such as Tamil Nadu, Gujarat, and Madhya Pradesh are also building policies, incentives, and infrastructure to attract space startups and investments. This marks a broader transition- from a single-institution model to a distributed, state-driven ecosystem.

From access to outcomes

The launchpad is already in place. Space is no longer a closed domain. It is open, competitive, and increasingly commercial.

What comes next is a harder phase- moving from access to outcomes. As the ecosystem matures, capital is expected to follow conviction. “More capital will move into the growth stage,” said Deepak Daftari. “We will also start seeing the first meaningful exits.” That transition - from funding to revenue, and from capability to market validation - will define the next phase of India’s space economy.