New Delhi, Aug. 31 -- Recently, in July 2026, a seven-storey rocket built entirely by an Indian startup lifted off from Sriharikota. 15 minutes later, Skyroot Aerospace's Vikram-1 was in orbit, 450 kilometres up.

India became only the third country - after the United States and China - where a private company has independently designed, built and flown its own rocket into orbit. Not a government agency, not a legacy defence contractor, but a startup founded in 2018 by two former ISRO engineers who left their jobs with ten people and $1.5 million in seed money.

"Hello space, we have arrived." Prime Minister Modi called it something that would encourage young Indians to dream bigger.

A launch is a single afternoon. What matters is what follows: India has a rocket in orbit and no clear way to fund the next hundred.

Six years, four hundred companies, half a billion dollars

In 2014, India had one registered space startup. It now has more than 400. The government opened the sector to private players in 2020, stood up IN-SPACe as regulator in 2022, allowed 100% foreign investment in satellite manufacturing in 2023, and approved a Rs 1,000 crore venture fund for space startups in October 2024 - sized for roughly 40 companies.

The numbers that followed: Indian space companies raised over $500 million cumulatively between 2020 and 2024, and close to $200 million more in 2025. Skyroot itself raised $60 million months before launch, co-led by Sherpalo Ventures and Singapore's GIC, at a $1.1 billion valuation - India's first space unicorn. Pixxel, Agnikul Cosmos and Digantara have each raised credible rounds too. The sector has shed its novelty. It has not shed its scale problem.

Who is actually writing the cheques?

Large rounds are led by Temasek and GIC out of Singapore, Lightspeed, Mayfield, Google and BlackRock out of the US, and Peak XV - Sequoia's India arm, but a global fund at heart. Indian mutual funds, insurers and family offices are almost entirely absent.

That is structural, not cosmetic. Venture capital runs on a seven-to-ten-year clock, while rockets take years to certify and satellites run on manufacturing cycles that simply do not fit VC timelines. Germany's Isar Aerospace, which is around the same age as Skyroot, has raised nearly $900 million but has still not achieved a successful orbital launch as of its latest attempt. Compared with India's numbers, the bigger question isn't why Isar raised so much but why Indian companies raise so little, from so few investors, while domestic capital largely stays away.

Foreign capital is present, but domestic capital is missing, and this gap could determine whether the sector grows or struggles. Closing it will require banks to lend against space assets, insurers to cover satellite risk, and equity markets to provide a clear exit. India has not had a single space-startup IPO yet.

The SpaceX shadow, and the Starlink fight ahead

Elon Musk's role in the private space industry is difficult to overlook. SpaceX listed on the Nasdaq in June 2026 at roughly $1.75 trillion, the largest IPO in history, months after Tesla converted a $2 billion xAI investment into SpaceX equity. Starlink is now in talks with India's telecom ministry; Reliance is reportedly building a rival constellation. India's sky is becoming a contest between the world's richest man and one of India's.

For Indian startups, SpaceX is an inspiration, benchmark and competitor at once. Its reusable-rocket economics cut launch costs from roughly $54,000 per kilogram to under $3,000 today - the same cost collapse that makes Vikram-1 viable. Skyroot does not need to beat Falcon 9; it needs to serve customers for whom Falcon 9 is too large, too expensive or geographically inconvenient. That market is real and crowded - Rocket Lab, Isar Aerospace and Chinese launchers are chasing it too.

The capital deficit

Mint highlighted a major concern in its coverage: access to capital remains one of the industry's biggest hurdles. The government wants the space economy to grow from $8.4 billion to $44 billion by 2033 - five times its current size in seven years. Isar Aerospace alone has raised nearly as much as India's entire private space sector raised in five years. The US raised $2.9 billion for space startups in 2024 alone. India's $500 million is a start, but it is not enough to close the gap, especially when the sector needs patient, long-term capital.

There is also limited data on where India's space funding goes, which companies receive it, at what stage or on what terms. There is no Indian PitchBook for the space sector. A 2026 Politecnico di Milano study mapped venture-funded space startups across Europe and the US, classifying over 113,000 companies. No similar study exists for India, partly because the necessary data is not readily available. The gap is not engineering - Vikram-1 has already shown that Indian companies can build. Finance, data and research remain major gaps.

What a real space economy requires

Rocket Lab took seven years and dozens of launches to approach profitability. SpaceX's launch business became viable with Falcon 9's reusable technology. One successful launch does not make an industry.

Reaching $44 billion by 2033 requires imaging companies, reliable domestic manufacturing and clear rules on spectrum and liability. Financing is equally important. Space bonds and revenue-based financing for long-gestation deep-tech companies remain largely untested. The government's Rs 1,000 crore fund is expected to support 40 companies, while many more need capital.

India has built this kind of infrastructure before in telecom and fintech. The challenge is now to do the same for space.

Vikram-1 reached orbit. The harder journey has just started.

Vikram-2 is under development, targeting 900 kilograms to low Earth orbit by late 2027, with commercial operations planned for 2028. Skyroot now has a roadmap, investors and a successful orbital launch behind it.

India's space sector now has proof that private companies can build orbital rockets and attract global investment. What it still lacks is the financial depth to sustain that progress - and building that financial base, though less visible than a rocket launch, will be one of the sector's biggest challenges over the next decade.

Views expressed are personal. V Gupta is Area Chair, A Singh is a student, both at OP Jindal Global University

Published by HT Digital Content Services with permission from Millennium Post.