2026 for January 1970

The Economic Survey 2025-26 has assessed India’s space sector amid a flat budget trajectory and growing expectations from the private industry.

India’s space programme has undergone a significant transition over the past decade, moving from a state-dominated model to a more open and commercially oriented ecosystem.
Landmark achievements such as successful lunar missions and a high launch success rate positioned India as a reliable spacefaring nation.
A major policy shift occurred in 2020, when reforms opened the space sector to private participation.
The creation of IN-SPACe as a regulatory and facilitative body and the encouragement of private launch vehicle and satellite start-ups marked the beginning of India’s “NewSpace” phase.
However, this transition has coincided with operational and fiscal challenges within the Department of Space (DoS).

The Economic Survey 2025-26 points out that the Department of Space has experienced near-stagnant budget growth over the last four years. When adjusted for inflation, the overall allocation has effectively declined.
Capital expenditure, crucial for new launch infrastructure, spacecraft development, and R&D, has fallen steadily.
In contrast, revenue expenditure, such as salaries and routine operational costs, has increased.
This shift has resulted in a growing share of the budget being consumed by maintenance rather than innovation, raising concerns about long-term technological competitiveness.
Additionally, the Department has repeatedly failed to fully utilise its allocated funds, leading to downward revisions during the Revised Estimates stage.
This weak absorption capacity has further constrained the case for a substantial budgetary increase.

Despite budgetary stress, the Survey highlights strong export performance.
Between 2015 and 2024, India launched nearly 400 foreign satellites for over 30 countries, generating substantial commercial revenue.
However, the Survey cautions that export earnings may be masking deeper structural issues.
Recent launch failures and near-misses have exposed vulnerabilities in manufacturing quality and supply chains.
The push for higher launch cadence, driven by commercial demand, has placed additional strain on an ecosystem still adapting from a protected state monopoly to a competitive market environment.

NewSpace India Limited (NSIL), ISRO’s commercial arm, has emerged as a key pillar in the government’s evolving strategy.
According to the Survey, NSIL’s revenues increased sharply within a few years, signalling the government’s intent to rely more on commercial income rather than tax-funded capital investment.
The implicit policy shift is towards commerce-led growth, where NSIL monetises launch services, satellite missions, and downstream applications.
However, this raises questions about whether commercial revenues can adequately substitute for sustained public investment in core R&D and critical infrastructure.

Industry associations have expressed dissatisfaction with current funding levels.
They argue that India’s space budget remains a very small fraction of GDP compared to leading space powers.
Proposals include scaling up allocations, expanding launch infrastructure, and introducing targeted production-linked incentives for space components.
Private players have also advocated for a procurement-driven model, where the government acts as an anchor customer by purchasing services and data from domestic companies rather than owning all assets.
This approach mirrors international practices and could provide predictable demand, encouraging private investment.

The Survey underlines a widening gap between what the industry seeks and what the Department of Space can realistically deliver.
While private firms demand rapid expansion and assured procurement, the Department faces constraints related to quality control, spending efficiency, and operational reliability.
The Survey also notes that different space programmes, such as human spaceflight, satellite launches, and strategic missions, compete for limited resources, complicating prioritisation and long-term planning.

The Economic Survey suggests a phased and balanced transition.
Strengthening quality assurance systems, fixing supply-chain weaknesses, and improving fund utilisation are essential first steps.
Large infrastructure projects, such as new spaceports, must progress without repeated delays.
Equally important is a clear roadmap identifying which missions will gradually shift from government-built assets to industry-provided services.
Enhancing institutional capacity to manage complex, long-term service contracts will be crucial for building investor confidence.

Source : TH

Space Sector FAQs

Q1: What concern does the Economic Survey raise about India’s space budget?

Ans: It highlights stagnation in real terms and declining capital expenditure.

Q2: What role is NSIL expected to play in the space sector?

Ans: NSIL is expected to drive growth through commercial revenues and services.

Q3: Why is declining capital expenditure a concern?

Ans: It limits long-term innovation, infrastructure creation, and R&D capacity.

Q4: How has the private industry responded to current budget trends?

Ans: Industry bodies have demanded higher allocations and procurement-based support.

Q5: What is the key challenge identified by the Survey?

Ans: Balancing commercial expansion with institutional capacity and operational reliability.