Why India’s Space-Tech Start-Ups are Stuck in a Low-Revenue Orbit

When Pakistani troops infiltrated the high-altitude ridgelines of Kargil in 1999, India struggled with precise targeting in a terrain where maps were unreliable.

Seeking real-time accuracy, India requested access to the US’ global positioning system (GPS) data. The request was denied, forcing Indian forces to rely on less accurate alternatives. This episode went on to shape India’s push for an indigenous navigation system. Efforts were accelerated to build sovereign space capabilities.

Fast forward to 2025. Operation Sindoor, launched by India in resp-onse to the Pahalgam terror attack by Pakistan, showcased New Delhi’s space-tech progress. Indigenous satellite communications and navigation technology were used to neutralise threats across the border.

However, even as India is building its space capabilities, many start-ups in the sector are struggling to generate meaningful revenues to scale.

An analysis of 30 most-valuable space-tech start-ups in India by Outlook Business shows that not a single company has been able to reach revenues of ₹100cr as of 2025. The highest, at ₹73.02cr, was logged by small satellite mission-as-a-service provider XDLINX Space Labs. Most others were in the range of ₹1–5cr.

“One major issue is the long technology development cycles, as space-tech products often take years to develop and test,” says Prateep Basu, co-founder and chief executive of SatSure, a Bengaluru-based space-tech start-up.

Pilots Without Pay

When a space-tech start-up founder Rishav (name changed) walked into a meeting with an oil company, he was confident of his product—an advanced satellite imaging technology that can detect early signs of crop disease and invisible oil and gas leaks in pipelines. He hoped for a paid pilot. Instead, he was asked for a free pilot.

This is a recurring challenge in India’s commercial market, where companies are often reluctant to pay for early-stage testing. “Indian companies want the solution to work from day one. You have to run a paid pilot for a few months. But here, if it’s not ready immediately, they expect a free pilot,” says Awais Ahmed, founder of space-tech start-up Pixxel.

In contrast, many European and American companies are willing to pay for such solutions. “In India, we may have one or two such customers. In the US, we are working with tens of them,” he adds.

This ties into a broader structural issue. Indian companies tend to avoid R&D tie-ups with start-ups. In fact, they do not have enough research money to spend. In India, total R&D spending is around 0.7% of GDP, with a limited private-sector participation. The US spends about 3–3.5% of GDP on R&D.

Another critical challenge is delays in government procurement. Here, the system is inherently cautious. “Naturally, bureaucrats have to be careful. There will be monitoring and auditing,” says Chiranjeevi Phanindra B, founder of space-tech start-up Cosmoserve and a former Indian Space Research Organisation (Isro) scientist.

Even before a request for proposal is issued, there are multiple rounds of internal discussions. Then, start-ups must repeatedly validate their solutions across departments.

Next is bidding. They get caught in the lowest-cost (L1) system, where the cheapest bid wins. “Current systems tend to prioritise cost through L1 bidding rather than quality. Start-ups often struggle to meet eligibility criteria such as strong balance sheets or prior performance records. As a result, larger companies frequently win contracts despite lacking core intellectual property,” says Basu.

So, from the first meeting to actual revenue, the process can take up to two years in India. “There is hardly any demand from the private sector and the government takes its own time,” says a founder.

Start-ups say timelines in the US are structured, with initial responses in about 30 days and final decisions within 90 days. More importantly, while Indian start-ups must prove their technology before bidding, the US uses procurement to build markets, funding early-stage solutions.

Infrastructure constraint is another bottleneck, where a ready technology is likely to run into a brick wall.

Abhi (name changed) has been trying to secure a launch slot to test his rocket technology for over a year now. But there is no single system that tells him which doors to knock for clearance. “If I want to go from PRL 8 [where the technology is built and tested] to PRL 10 [where it is launched and ready for commercial use], where do I go,” he asks.

India currently has only two operational launch pads at the Satish Dhawan Space Centre, Sriharikota, which are prioritised for Isro missions, creating a sequencing bottleneck for private players.

“Satellite operators face long wait times for a ride to orbit. Even when they find one, it may not be headed to the right orbital destination. They’re forced to either wait or compromise,” says Pawan Kumar Chandana, co-founder and chief executive of Skyroot Aerospace.

While India has just 4–8 launches a year, the US conducts over 100 and China carries out around 70.

Experts argue for a structured system. “Start-ups need a single window. Larger entities can navigate the system, but start-ups cannot. If we want a start-up-driven space economy, we must make it easier for them,” says Anirudh A Damani, managing partner at Artha Venture Fund, an early-stage micro venture-capital (VC) firm.

Product-Market Gap

When Rajesh (name changed) walked into a VC meeting to pitch his product, he thought was prepared. But when the investor questioned him about product-market fit and valuation, he was caught off guard.

“We don’t pay enough attention to commercial viability. We don’t always ask whether there is a real market or if customers are willing to pay. This gap is especially visible among core technical founders,” says Cosmoserve’s Phanindra.

His own journey reflects this. In the early days, he set out to build a highly advanced system to solve the space-debris problem. However, customers were only willing to pay for large debris removal. His company had to pivot to large debris.

Many argue that space-tech solutions are still far removed from ground realities. “While the Indian market is cost-conscious, the bigger issue is the lack of effective solutions. Even farmers who can afford such services often do not receive actionable or reliable insights,” says Kanchan Borade, head of artificial intelligence at IT outsourcing service company DhanInfo.

A related challenge is timing. Experts say engagement with customers ensures that when the product is ready, the start-up is commercially ready as well. “To build the technology right, one key question is whether you are engaging with future customers early, even if revenue takes time,” says Arjun Rao, founding partner at Speciale Invest, a VC firm.

The government, on its part, has introduced mechanisms like Indian National Space Promotion and Authorisation Centre (IN-SPACe), set up in June 2020, facilitate private sector participation. However, industry insiders say that the agency needs to scale up with the rise in demand.

“Currently, its workforce is limited, estimated to be around 100 or fewer people. However, as the space industry grows, a larger team will be required,” says retired Lt. General Anil Bhatt, who is also the director general of Indian Space Association.

Current challenges must also be seen in context. Until four years ago, Isro handled most technical and commercial activities, with very few start-ups in the ecosystem.

“Your observation that revenues have remained relatively small is not surprising. This is the trajectory one would expect: a slow initial phase, followed by exponential growth once products mature and demand builds—both domestically and internationally,” says Pawan Goenka, founding chairperson of IN-SPACe.

Today, space is an important area to own and control technology as evidenced by the US-Israel-Iran war. It has highlighted vulnerabilities in space systems, with Tehran reportedly using GPS jamming and spoofing to disrupt satellite communications.

For India, the path forward is clear: it must keep accelerating the development of its space technology. And to aid this development, the country must tap into the massive potential of its home-grown space-tech start-ups.

With both public and private support, these start-ups can bridge the gap between raw innovation and commercial scale, and eventually grow their revenues to a meaningful level.