ISRO is following government directives to open the space sector to private players, which includes stepping back from building launch vehicles and satellites. The Indian Space Research Organisation (ISRO) plans to eventually stop manufacturing these systems, shifting production duties to the private sector and public-sector undertakings.
New Roles for ISRO and Private Players
IN-SPACe chairman Pawan Goenka stated during the Business Today summit that the agency will not build launch vehicles. “ISRO will not make any launch vehicles and will not manufacture any launch vehicles. That will all be done by the private sector or PSU,” he said. The transition involves handing over mature technologies to companies so ISRO can focus on advanced research and scientific missions.
The process is already underway with the Small Satellite Launch Vehicle (SSLV), whose technology has been transferred to Hindustan Aeronautics Limited (HAL). Next major steps involve the PSLV and the Launch Vehicle Mark-3 (LVM3), India’s largest rocket currently in operation. IN-SPACe is inviting private firms to take over the end-to-end realization, operation, and commercialization of the LVM3.
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This transfer is significant because the LVM3 is capable of carrying up to 4,000 kg to a geosynchronous transfer orbit. Unlike the SSLV process, public sector firms will be excluded from bidding for the LVM3 transfer. To date, 120 technologies have already moved to the private sector.
The government is also planning to transfer operations of a new launch centre to the private industry. The operator will be decided within the next four to five months. This facility will join the growing list of assets being handed over as the state retreats from routine building tasks. Once the technologies evolve, they can be transferred to private firms for commercial operations, a cycle designed to keep ISRO relevant in a changing market.
This structural change effectively dissolves the long-standing barrier between state-led engineering and commercial viability. When a government agency stops building the hardware it tests, it forces the private sector to grapple with real-world reliability rather than relying solely on the pristine environment of a public laboratory.
The shift implies a cultural transition for engineers, moving from the secure ecosystem of a state-run facility to the demanding, high-stakes pressure of a competitive global marketplace where safety margins are often tighter and performance is scrutinized by paying customers rather than just mission success criteria.
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Startups are anchoring the sector
The move comes as India’s private space ecosystem is growing rapidly. Government data shows the number of spacetech startups surged from single digits in 2019 to more than 400 by early 2026. These entities are building niche offerings across launch vehicles, satellites, payloads, ground infrastructure and space-data services.
The ecosystem is maturing, evidenced by the fact that India’s only spacetech unicorn, Skyroot Aerospace, developed and successfully launched Vikram-1 in July 2026. The administration is supporting this rise by reducing costs through launch support schemes, providing subsidies for private launches and access to government space infrastructure. Additionally, the agency is acting as an anchor customer, placing an order for 31 satellites with private firms while ISRO builds 21 more under the same programme.
The broader aim of this privatization drive is to significantly expand the economic output of the sector. The administration targets growing the space economy from around $8 billion currently to $44 billion by 2033. Exports and private-sector demand are expected to play a major role in reaching that target.
