How India is building a decentralised space economy to power its $44 billion orbit

As the global space economy charts an ambitious trajectory towards the $1 trillion mark by 2030, India is also poised for a major transformative leap. With over 11,000 space startups having emerged in the past decade, over 200 space startups are based out of India with funding, regulatory and incubation support from ISRO, IN-SPACe, DoS as well as state governments.

Even before the Indian Space Policy 2023 came into effect and unlocked formal entry points for private space players, several Indian states have played pivotal roles in nurturing the country's space ambitions. Karnataka, has been home to ISRO's headquarters and Telangana has always been a strong supporter for space-tech startups through initiative like the T-Hub incubator and the Image Tower.

Emergence of State-level Space Policies: A Decentralised Strategy

Building on this ongoing momentum, several Indian states have proactively begun drafting or announcing dedicated space policies tailored according to their regional strengths. These policies not only aim to attract private investment and talent but also to strengthen local manufacturing, foster academia–industry collaboration and streamline regulatory support for emerging space ventures. This decentralised approach is completely in sync with the Indian Space Policy 2023, which encourages private participation and commercialisation.

Telangana became the first state to launch a dedicated SpaceTech Framework in 2022, aiming to make Hyderabad, a national hub for commercial space innovation. The policy covers the entire value chain, from upstream manufacturing to downstream applications, while offering single-window clearances, infrastructure access and incentives for IP generation. Similarly, Kerala’s KSPSC project focuses on developing a 40-acre space park, R&D and startup collaboration, and specialised courses with institutions such as IISU and CUSAT, to generate over 3,000 direct jobs.

Other states are also following with policy developments that can leverage their regional strengths. The SpaceTech Policy (2025–2030) of Gujarat is majorly incentive-driven, offering up to ₹5 crore in grants and full SGST reimbursement for seven years to attract over 100 startups by 2030. The policy aims integration with iCreate, GUSEC and Gujarat Electronics Policy incentives to push companies working in remote sensing, earth observation, telemedicine, precision agriculture and disaster monitoring. Tamil Nadu’s Draft Space Industrial Policy 2024 has outlined the plan to build a complete upstream manufacturing base with strong skilling, financial and infrastructure enablers, which would encourage both MSMEs and help firms to set up units in important cities like Chennai and Coimbatore. Karnataka, home to India’s space agency ISRO, is building on its leadership with a policy that supports capital subsidies, R&D grants and international partnerships, aiming to cement Bengaluru’s role as the innovation capital of South Asia. Recently, the Karnataka government also signed an MoU with IN-SPACe for establishment of a Centre of Excellence for Space Technologies in Bengaluru and development of a public-private Space Manufacturing Park to bring in next-generation satellite and launch vehicle production.

New Entrants and Evolving State Strategies

Other states like Uttarakhand, Maharashtra and Uttar Pradesh are also making similar space-related moves which are in different stages of evolution. Uttarakhand has leveraged its unique geography for environmental and disaster monitoring and already hosts India’s first commercial Space Situational Awareness observatory. The state of Maharashtra is also in the stage of drafting its space policy which majorly emphasizes on entrepreneurship and public private partnerships (PPPs), while Uttar Pradesh on the other hand is using its Defence Industrial Corridor to promote aerospace and dual-use technologies. Collectively, these initiatives represent a growing trend of state-led space innovation, creating a more distributed and collaborative national space ecosystem.

Aligning State Initiatives with National Space Goals

For India's state-led space approach to succeed, several elements will be critical. First, effective coordination mechanisms between states and central agencies must emerge to ensure complementarity rather than competition. Second, states should continue to specialize based on their existing strengths rather than attempting to replicate the same capabilities. Third, both states and the central government must maintain their commitment to international partnerships that bring complementary capabilities and market access. Finally, regulatory frameworks must evolve to provide the stability and predictability that private investors require.

The diverse space policies across Indian states open up a range of opportunities for the private sector, but the states need to address the challenges related to regulatory consistency, infrastructure development, investment inflow and workforce capacity. As India boldly accelerates its space ambitions, the emergence of state-led space policies reflects the growing importance of regional innovation hubs in building a resilient national space ecosystem.

Much like China’s Provinces fuelling industrial expansion, Indian states are positioning themselves to become specialized hubs for different segments, from launch vehicles to satellite manufacturing. However, while this decentralized growth is a positive signal for innovation and employment, it also demands careful management.

It is essential that State Space policies do not lead to fragmentation or duplication but be a harbinger of added opportunities and fair competition for the growing space sector. Areas like spectrum management, orbital slots, and ITU-level engagements must, and will remain coordinated through central authorities. We believe that these state-level policies complement the national vision and balanced framework promoting competitiveness will enable India to achieve its ambition of growing its space economy fivefold to $44 billion by 2033.

Views are personal. Lt. Gen. AK Bhatt (Retd.) is Director General, Indian Space Association (ISpA).