Economic Survey 2025-26 and India’s Space Sector – Explained

Space Sector Latest News

• 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 Sector: Evolution and Policy Shift

• 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).

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Budgetary Trends in the Space Sector

• 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.

Export Performance and Structural Concerns

• 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.

Role of NSIL in the Emerging Model

• 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 Expectations and Policy Demands

• 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.

Challenges Highlighted by the Economic Survey

• 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.

Way Forward

• 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