New Delhi, Oct 24 : The Union Cabinet, chaired by Prime Minister Narendra Modi, on Thursday approved the setting up of a Rs 1,000 crore venture capital (VC) fund dedicated to the growing space sector.

The deployment period of the proposed VC fund, under the aegis of IN-SPACe, is planned to be up to five years from the actual date of the start of the fund operations. The proposed fund is expected to boost employment in the Indian space sector by supporting startups across the entire space supply chain. The average deployment amount could be Rs 150-250 crore per year, depending on the investment opportunities and fund requirements, said the Cabinet.

According to the government, the indicative range of investment is proposed to be Rs 10-Rs 60 crore, depending upon the stage of the company, its growth trajectory, and its potential impact on national space capabilities. Indicative equity investment range could be at Rs 10 crore-Rs 30 crore for the growth stage and at Rs 30 crore-Rs 60 crore for the late growth stage.

"Based on the above investment range, the fund is expected to support approximately 40 startups," said the Cabinet.

As part of its 2020 space sector reforms, the government established IN-SPACe to promote and oversee private sector participation in space activities. IN-SPACe proposed a Rs 1,000 crore VC fund to support the growth of the space economy, currently valued at $8.4 billion, with a target to reach $44 billion by 2033.

With nearly 250 space startups emerging across the value chain, timely financial support is crucial to ensure their growth and prevent talent loss overseas, according to a Cabinet note. The proposed government-backed fund will boost investor confidence, attract private capital, and signal the government's commitment to advancing space reforms, it added. The fund is designed to foster innovation and economic growth through capital infusion, to retain companies in India, accelerate space technology development, boost global competitiveness and create a vibrant innovation ecosystem.

The capital infusion will create a multiplier effect by attracting additional funding for later-stage development, thereby instilling confidence in private investors, said the Cabinet.

/IANS