Welcome to this week’s edition of TOPICAL WEDNESDAY! Today, we explore key trends in India’s deeptech sectors and how our country is making its mark in these highly advanced industries.
Negativity surrounding the Indian economy continues to intensify, as evidenced by a sharp decline in Indian stock indices- This drop underscores concerns about GDP growth, inflation, high oil prices, and rising unemployment, further exacerbated by the USA’s reciprocal tariffs, which take effect today.
Despite these challenges, significant developments are unfolding on the ground, driven by both government initiatives and private sector contributions in cutting-edge technology. These include advancements in the space sector, nuclear power, and semiconductors. While the full impact of these initiatives may take years to materialize, they represent transformative, multi-decadal shifts that could reshape India’s economy and also its global image as just a an IT powerhouse. Though there are risks and uncertainties, the government’s strategic steps are laying the foundation for technological growth.
Today, we will explore recent developments in three key sectors – space, nuclear energy, and semiconductors, that signal a promising transformation.
Space Sector: From Government Monopoly to Private Innovation
(Source: Innovation News Network)
India’s space sector is one of the country’s most remarkable success stories, emerging unexpectedly to make a global impact. Despite being a developing nation with significant economic challenges, India launched its first indigenous rocket into space just 3.5 decades after independence, making it the 7th country and the 3rd Asian nation to achieve this feat.
Since then, the Indian Space Research Organization (ISRO) has built a reputation for cost-effective and efficient space missions. This was further reinforced by the success of Chandrayaan-3, which made India the first country to land near the Moon’s South Pole—where potential water ice reserves exist—at a remarkably low cost of Rs. 612 crore (~$75 Mn). In comparison, Russia’s Luna-25 mission cost ~$200 Mn.
Recognizing the potential of the space sector, the Indian government has initiated reforms to encourage private participation. The 2020 Space Sector Reforms have led to the creation of a thriving ecosystem, growing from a single startup to over 300 space startups today.
Key Developments
Regulatory Framework – The establishment of IN-SPACe in 2022 as a single-window agency to facilitate collaboration between ISRO and private players.
IN-SPACe recently shortlisted 6 private consortiums for an Earth Observation (EO) satellite constellation project aimed at enhancing India’s geospatial capabilities through a public-private partnership (PPP). The winning consortiums will gain access to India’s expanding geospatial data market and advanced imaging technologies, positioning them as key players in the global space industry. To support this, the government will provide up to Rs. 350 crore in loans to the winning consortium, repayable over the constellation’s operational period.
Investment Boom – A Rs. 1,000 crore venture capital fund for space-tech startups is setup by the government to address the lack of risk capital, promote research & development, and support innovation in satellite manufacturing and launch services.
This initiative aims to fund ~40 startups across the space supply chain, with initial investments expected to begin in 2025.
FDI Liberalization – In 2024, the government permitted 100% FDI under the automatic route for satellite components, 74% for satellite manufacturing and operations, and 49% for launch vehicles and spaceports. Since this policy change, foreign investment in the sector has surged and the total investment reached to $125 million, attracting global giants like SpaceX and Blue Origin, who have expressed interest in establishing operations in India.
The impact of these policies is already visible. Companies like Skyroot Aerospace successfully tested India’s first privately-developed rocket, while Agnikul Cosmos is building its own launchpad at the Satish Dhawan Space Centre. India’s space economy, currently valued at $13 Bn, is projected to grow to $44 Bn by 2033, capturing 8% of the global space market.
Nuclear Energy: The Atomic Leap Forward
(Source: India Today)
India’s nuclear power journey began in 1969 with the commissioning of the Tarapur Atomic Power Station (TAPS), making it the 15th nation and the first in Asia to operate a nuclear power plant. Over the decades, India has transitioned from foreign-led nuclear initiatives to developing indigenous nuclear technology. Today, India has eight nuclear power plants and 24 reactors, ranking 13th globally in nuclear power capacity.
In February 2025, the Indo-US nuclear deal marked a significant milestone, aligning with the government’s ambitious plan to increase nuclear capacity from 8.2 GW to 100 GW by 2047, a 12x expansion.
Key Policy Shifts
Nuclear Energy Mission – A Rs. 20,000 crore allocation focused on developing Small Modular Reactors (SMRs), which offer scalable and safer nuclear energy solutions.
We have already covered SMR in detail so do check it out here.
Legislative Reforms – One of the key developments in the Indo-US nuclear deal was the amendment of the Atomic Energy Act and the Civil Liability for Nuclear Damage Act (CLNDA) to enable greater private participation.
Previously, the CLNDA held suppliers (private companies) liable for accidents caused by faulty equipment, even decades later, which severely limited private investment as nuclear accidents are one of the largest and most destructive man-made tragedy on earth and being liable for it could be catastrophic.
The amendment now aligns India’s policy with global standards by shifting primary liability to the operator (still NPCIL in most cases), while suppliers are no longer subject to unlimited liability. This change reassures both Indian and foreign private players about financial risks, making the sector more attractive for investment and innovation.
Private Participation Model – India’s nuclear power sector, once restricted to state-owned entities like NPCIL, is now opening up to private participation, particularly in Small Modular Reactors (SMRs). NPCIL has invited private firms to finance and build 220 MW Bharat Small Reactors, while the U.S. has approved technology transfers to India. However, the Department of Atomic Energy (DAE) will continue overseeing critical areas like nuclear fuel management and waste disposal.
These steps are designed to clear the major hurdles & imposition in the sector and will attract private players, both domestic and foreign to work together with the government for the development of this sector. Minister Jitendra Singh believes the 100 GW target is “challenging but not unachievable,” drawing parallels to the rapid growth seen in India’s space sector after liberalization.
Semiconductor Research: The Silicon Surge
(Source: India Frontier)
In a remarkable achievement, India was recently ranks third globally in semiconductor research paper publications, behind only China and the US. Between 2018 and 2023, Indian researchers contributed 39,709 papers on chip design and fabrication, representing 8.4% of the global share and showing 26% growth over five years.
This research excellence is supported by:
- Talent Pool: Indian engineers constitute 19% of the global semiconductor talent.
- Government Investment: Rs 2,000 crore to support state-of-the-art R&D
- Manufacturing Push: 5 semiconductor units approved, including Micron’s facility in Gujarat expected to be operational by early 2025.
Currently valued at $52 Bn, India’s semiconductor market is projected to reach $103.4 Bn by 2030, growing at a CAGR of 13%. While India’s semiconductor industry is still in its early stages, these strategic steps lay the groundwork for long-term success.
Looking Ahead: The Convergence of Capabilities
As India develops its space, nuclear, and semiconductor sectors, it is building a strong technological foundation for the future. The key to success will be effective collaboration between the government and private players, along with a conducive environment for growth. However, if India loses momentum in execution, it could face setbacks, as these sectors are evolving quickly with global investment and innovation.
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Disclaimer: This newsletter is for educational purposes only and is not intended to provide any kind of investment advice. Please conduct your own research and consult your financial advisor before making any investment decisions based on the information shared in this newsletter.
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