INSPACe Explained: How India's Space Privatisation Opened ISRO's Rockets to Startups

Before June 2020, a private Indian company that wanted to build a rocket had exactly one option: ask ISRO for permission, use ISRO's facilities on ISRO's schedule, and wait. ISRO was simultaneously the builder, the regulator, and the gatekeeper. That structure made sense in 1969, when the goal was to get India into space at all. By 2020, it was a bottleneck. The global commercial space economy was already worth over $400 billion, and India's share of it, despite ISRO's genuine engineering excellence, was under 2 percent.

The Indian National Space Promotion and Authorisation Centre, known as INSPACe, was created by a cabinet decision on June 24, 2020. Its job was structural: separate the regulator from the operator. ISRO would remain the national agency for government missions, research, and flagship programmes like Gaganyaan. INSPACe would become the single window through which private players, startups, established firms, foreign investors, could apply for authorisation to build, launch, and operate space assets from Indian soil.

The distinction sounds administrative. The consequences were not.

The most immediate change was access to infrastructure. ISRO's launch facilities at Sriharikota, among the best-positioned launch sites in the world for equatorial orbits, had been exclusively government-use. Under the new framework, private companies could apply to use those facilities commercially. Agnikul Cosmos, a Chennai-based startup, became the first private Indian company to sign a launch services agreement with ISRO under the new regime. Skyroot Aerospace, founded in Hyderabad by former ISRO engineers, went further: in November 2022, its Vikram-S rocket became the first privately built and privately launched rocket to lift off from Indian soil.

That launch lasted 89 seconds and reached an altitude of 89.5 kilometres. By conventional measures, it barely scratched space. By the measure of what it represented, a private Indian company owning the full stack from design to launch, it was a clean break from everything that came before.

INSPACe also opened the door to foreign direct investment in Indian space companies, which had previously been capped or effectively closed. The policy raised the FDI limit in the sector to 100 percent in certain categories, making Indian space startups suddenly legible to global venture capital in a way they had not been.

A common misreading of the privatisation push is that it diminishes ISRO. The opposite is closer to the truth. ISRO's scientists spent decades building capabilities, the cryogenic engine technology that took twenty years to develop independently after a US technology-transfer denial in 1992, the Mars Orbiter Mission completed for $74 million, Chandrayaan-3's successful lunar south pole landing in August 2023, and those capabilities now function as a foundation the private sector can build on rather than replicate from scratch.

ISRO transferred its operational launch vehicle business, specifically the PSLV commercial launch programme, to a new entity called NewSpace India Limited, or NSIL. This freed ISRO's core teams to concentrate on what only a national agency can do: deep-space missions, human spaceflight under Gaganyaan, and the science programmes that have no commercial return. The privatisation, in this reading, gave ISRO permission to stop doing things it was never meant to do permanently.

The number of registered space startups in India went from fewer than five in 2019 to over 200 by the mid-2020s. Not all of them will survive. Several are working on small satellite launch vehicles to compete in the global market for rapid, low-cost orbital delivery. Others are building earth-observation satellite constellations aimed at agriculture, disaster management, and defence applications. Pixxel, based in Bengaluru, is building a hyperspectral imaging constellation. GalaxEye is working on multi-sensor satellite technology. Dhruva Space has already had payloads fly on ISRO missions.

What connects them is the regulatory clarity INSPACe provided. Before 2020, the legal framework for a private Indian company to own a satellite in orbit was genuinely ambiguous. The Outer Space Treaty of 1967, which India is a signatory to, places liability for space objects on the launching state, meaning the Indian government was technically responsible for anything a private Indian company put in orbit, even if the government had no mechanism to authorise or oversee it. INSPACe created that mechanism. It gave the government a way to say yes with a paper trail, and gave private companies a way to operate without legal exposure.

The Space Activities Bill, which would give statutory backing to INSPACe's authorisation role, has been in draft form for years and remains pending as of the time of writing. Until it passes, INSPACe operates under executive order rather than legislation, which means its authority is real but not yet anchored in law the way comparable agencies in the US, France, or Japan are. That gap matters for long-term investor confidence.

Gaganyaan, India's first crewed spaceflight programme, is also expected to generate downstream commercial demand. A human spaceflight capability requires life-support systems, crew modules, recovery operations, and eventually a sustained orbital presence, all areas where private contractors will play a role. The Axiom Space agreement that will send Indian astronaut Shubhanshu Shukla to the International Space Station as part of the Axiom Mission 4 crew is a preview of the kind of public-private interface that Gaganyaan will eventually require at scale.

The 2020 cabinet decision did not produce a rocket. What it produced was a market, one that ISRO's decades of investment made credible, and that INSPACe made legally possible. The startups building on that foundation are, in a precise sense, spending inheritance that generations of ISRO scientists earned.