India's Space Startups Find Lucrative Future in Military Surveillance
India's decision to open the space technology sector to private companies five years ago is now yielding significant results. Startups that initially focused on agriculture and climate data are rapidly pivoting toward a more profitable frontier: defence surveillance.
These companies are positioning themselves to capture substantial government contracts, transforming India's private space economy in the process.
Major Players Shift Focus to Defence Contracts
Google-backed satellite imaging startup Pixxel and its Bengaluru-based counterpart Digantara are leading this strategic shift. Both companies now target defence contracts for at least half of their future business.
Awais Ahmed, cofounder and CEO of Pixxel, revealed ambitious projections. "We expect to generate revenue in the hundreds of millions in the next three years," he stated. "A rising volume of defence contracts, both in the US and India, will mean that 40-50% of our revenue will come solely from defence clients."
Pixxel currently operates six ultra-high resolution satellites launched in 2021 and 2025. The company earned nearly 80% of its revenue from commercial clients in the previous fiscal year.
Digantara's CEO Anirudh Sharma projected even stronger defence dependence. He expects the company to generate over ₹250 crore by March 2027, with 80% coming from government-backed clients.
"The current capital we have will go significantly into research and development for building satellite-based defence technologies and solutions," Sharma explained. "This will be our major revenue source in the next two years."
Government Initiatives Fuel the Transition
The Ministry of Defence has actively encouraged this shift through several initiatives. Previously, the government procured space technology exclusively through ISRO.
In April 2018, the Centre launched its Innovation for Defence Excellence challenge. This program specifically encourages private startups to develop technical applications for India's defence bodies.
The formal opening of the space sector to private companies in 2020 created additional opportunities. Pixxel has already won two iDex projects that fast-track their development.
Ahmed confirmed one current revenue-generating contract involves "building and maintaining a surveillance satellite for the Indian Air Force."
Broader Industry Trends and Challenges
Other space startups are following similar paths. Rocket builder Skyroot Aerospace and smaller ventures like GalaxEye and Bellatrix Aerospace are all exploring defence surveillance opportunities.
Pawan Kumar Chandana, CEO of Hyderabad-based Skyroot Aerospace, noted the strategic importance of defence clients. "Defence is one of the largest users of space-based capabilities," he observed. "Defence clients are likelier to be frequent takers of our launch services."
Despite the promising outlook, significant challenges remain. Engineering satellites and rockets requires years of development and millions of dollars in investment.
Chaitanya Giri, space fellow at Observer Research Foundation, emphasized the need for strategic focus. "Chasing commercial contracts will be a path to much slower growth," he cautioned. "Most space firms should either focus on defence contracts, diversify worldwide, or create independent entities solely for defence work."
Private startups cannot simply piggyback on ISRO's established reputation. They must prove their products in space through successful deployments and reliable performance.
Global Opportunities and Strategic Positioning
The potential market is substantial. India's private space economy revenue is projected to surge from $8.5 billion to $44 billion over the next eight years. This represents an annualized growth rate of 23%.
Giri sees international potential for Indian space startups. "Private space startups can help India emerge as one of the world's most strategically important defence suppliers," he stated.
However, he noted regulatory challenges in major markets like the United States. "The US has stringent regulations that will require Indian entities to set up independent operations there," Giri explained.
He suggested alternative strategies for growth. "Focusing on defence requirements in the global south could be a significant revenue driver for space firms diversifying into defence."
Early clients for these startups already include prestigious organizations:
- Ministry of Defence
- Department of Science and Technology
- NASA
- European Space Imaging
India's four most-funded space startups have raised over $315 million in the past five years. Most capital has gone into developing and testing rockets, satellites, and related technologies.
The next three years will prove crucial for determining whether these defence-focused strategies deliver the projected growth. As startups continue to develop specialized surveillance capabilities, they're positioning India as an emerging player in the global defence space market.
