The most important question confronting India’s space programme is no longer whether the private sector should be allowed into space. That decision has already been made. The harder question is what the government should continue doing once private companies become capable of building rockets, satellites and space services themselves.
The answer will determine whether India’s current reforms produce merely a larger space industry—or a fundamentally more powerful national space ecosystem.
The immediate debate has been triggered by concerns within ISRO about the transfer of manufacturing and operational activities to industry. A consortium involving Hindustan Aeronautics Limited (HAL) and Larsen & Toubro is taking up production of the Polar Satellite Launch Vehicle, while Small Satellite Launch Vehicle technology has been transferred to HAL. ISRO employees have consequently sought clarity about where this transition ultimately leads.
ISRO has responded categorically. “We wish to categorically state that ISRO will neither be privatised nor will its importance be diminished,” the agency said on September 6. It described the emerging framework as an “ISRO-led national space ecosystem”, arguing that industry should scale mature technologies while ISRO concentrates its scientific manpower on frontier research, advanced technologies and complex national missions.
That formulation points towards the real issue: institutional boundaries. India now effectively has four pillars in its space architecture—the Department of Space, ISRO, IN-SPACe and NewSpace India Limited (NSIL)—alongside an increasingly important fifth pillar: private industry. The success of the reforms will depend on whether their responsibilities remain sufficiently distinct.
The Department of Space should provide overall policy direction and retain governmental control over strategically important capabilities. ISRO should increasingly become India’s high-technology engine: undertaking frontier R&D, human spaceflight, advanced propulsion, next-generation launch systems, deep-space exploration, scientific missions and technologies whose risks or time horizons make them unsuitable for immediate commercial investment.
IN-SPACe occupies a fundamentally different position. It is supposed to enable, facilitate and authorise non-government space activities. Its importance will grow as private companies begin operating launch vehicles, satellites, constellations and infrastructure of their own. It therefore needs to evolve into a technically sophisticated and institutionally credible authorisation and oversight mechanism—not merely a facilitator for private investment.
NSIL has yet another function. Created in 2019 as a government-owned company, its mandate is commercial. It commercialises ISRO-developed capabilities, facilitates technology transfer, markets launch and satellite services and helps shift mature technologies towards industrial production. Its mandate has included PSLV productionisation, SSLV-related industrialisation and commercial exploitation of technologies developed within ISRO.
Put simply, the emerging division should be: ISRO invents and pushes the technological frontier; IN-SPACe authorises and oversees the non-government ecosystem; NSIL commercialises mature public technologies and services; industry manufactures, innovates and competes; and the Department of Space sets national policy and protects strategic interests.
But these lines cannot remain theoretical. As private participation deepens, difficult questions will emerge.
Who certifies that an industry-produced rocket is safe to launch? Who carries responsibility when a launch fails? Who approves modifications to an ISRO-designed vehicle once manufacturing has been transferred? Can IN-SPACe simultaneously promote private space companies and independently scrutinise them? Where does NSIL’s commercial role end and ISRO’s technological responsibility begin?
India will eventually need answers embedded in transparent rules, certification regimes and institutional accountability.
There is a useful precedent—and warning—in the United States. America did not build its commercial space industry by dismantling NASA. It maintained a powerful government space agency while creating conditions in which companies could develop capabilities previously dominated by government programmes. The spectacular rise of Elon Musk’s SpaceX demonstrates the possibilities.
NASA’s Commercial Orbital Transportation Services programme helped companies develop commercial cargo transportation systems. SpaceX began delivering cargo to the International Space Station in 2012. NASA subsequently awarded Boeing and SpaceX fixed-price Commercial Crew contracts in 2014. SpaceX’s Crew Dragon was certified by NASA for human transportation in 2020 and has since become an operational means of carrying astronauts to and from the International Space Station.
The institutional principle is more important than the individual contracts. NASA did not tell SpaceX simply to manufacture NASA rockets. It increasingly defined requirements, provided funding and technical expertise, established stringent safety standards, certified systems and then purchased transportation as a service. The private company had incentives to design, manufacture, iterate and operate its own system.
NASA describes the objective explicitly: commercial companies can concentrate on transportation to low-Earth orbit while NASA focuses resources and expertise on deep-space missions. Under Commercial Crew, NASA purchases astronaut transportation from private providers through fixed-price arrangements while retaining certification and safety responsibilities.
That distinction contains an important lesson for India. The ultimate ambition should not be to create private factories that manufacture ISRO-designed rockets indefinitely. That would expand industrial capacity, but it would not necessarily create Indian equivalents of SpaceX.
A genuinely competitive space industry emerges when companies begin owning designs, taking technological risks, investing their own capital, competing for government contracts and selling the resulting services to customers beyond government.
SpaceX succeeded partly because government demand gave the company an anchor customer while leaving substantial engineering responsibility with the company. Its Falcon 9 became the first orbital-class rocket capable of re-flight, while Dragon developed from cargo transportation into a human-rated spacecraft. NASA remained the customer, technical partner and safety authority without having to own SpaceX.
The model has now extended much further. NASA is working with SpaceX and Blue Origin on lunar landing systems for Artemis. Even here, where human safety and national prestige are involved, NASA combines private development with governmental requirements, engineering collaboration and safety oversight.
India should not mechanically copy this architecture. ISRO and NASA emerged from different histories, operate at vastly different budgetary scales and function within different industrial environments. India’s strategic requirement for technological self-reliance is also particularly important.
But the American experience establishes an important proposition: private-sector success does not require a weaker government space agency.
In fact, a technologically formidable public agency can make private success more likely. NASA provides scientific programmes, difficult missions, infrastructure, technical knowledge, standards and enormous government demand. Companies such as SpaceX provide capital, entrepreneurial risk-taking, rapid engineering cycles, manufacturing scale and commercial discipline.
India needs its own version of that equilibrium. ISRO should therefore become more ambitious, not smaller. If industry can eventually manufacture PSLVs and SSLVs, ISRO’s engineers should be concentrating on reusable launch vehicles, advanced propulsion, human spaceflight, the Bharatiya Antariksh Station, next-generation satellites, lunar infrastructure and missions deeper into the solar system.
At the same time, Indian companies must eventually progress beyond being suppliers to ISRO. They should design launch systems, build satellite constellations, operate commercial missions and compete internationally.
The government’s latest numbers suggest that this ecosystem is beginning to acquire scale. More than 400 space start-ups were registered by February 2026, while investment in Indian space start-ups had exceeded $500 million. The government wants India’s roughly $8 billion space economy to grow to around $40–45 billion over the coming decade.
Achieving that ambition requires more than transferring production lines. India must create an architecture in which ISRO undertakes what industry cannot yet do, industry does competitively what the government no longer needs to do exclusively, NSIL converts public technology into commercial opportunity, and IN-SPACe ensures that competition develops without compromising safety, security or national interest.
The debate over whether ISRO is being “privatised” therefore risks missing the larger transformation.
The United States did not have to choose between NASA and SpaceX. It eventually created an ecosystem capable of sustaining both. India should aspire to something similar—not an Indian SpaceX created by weakening ISRO, but several globally competitive Indian space companies growing around an ISRO that remains technologically indispensable.
That would be the real measure of successful space reform: not how much activity ISRO gives up, but how much additional capability India gains.
