Is Karnataka Losing Its Lead in India’s Space Tech Race?

A war of words—and proposals—on social media has left space tech founders and investors in India with a troubling question: Is Karnataka still conducive for space innovation?

In a post on X, Kshitij Khandelwal, Founder and CTO, Pixxel, which is building a constellation of hyperspectral earth-imaging satellites, lamented that expanding the satellite production facility was becoming a challenge in the state. 

“Trying to get land for making a satellite factory in the outskirts of BLR has been more difficult than actually making said satellites,” he posted on X.

Responding to the post, Andhra Pradesh IT and Industries Minister Nara Lokesh pitched for Anantapur as an alternative destination. “Kshitij, there’s a new investor-friendly destination on the outskirts of Bengaluru. It’s called Anantapur,” Lokesh said.

The minister also highlighted the state's growing aerospace ecosystem and dedicated infrastructure initiatives. “We're building Space Cities, aerospace parks and ready-to-go industrial ecosystems so founders can spend their time building satellites instead of hunting for land,” he added.

The Tamil Nadu government’s investment promotion arm, Guidance Tamil Nadu, also invited Pixxel to consider Hosur as a potential hub.

While MB Patil, Karnataka’s Minister for Large and Medium Industries and Infrastructure Development, also reached out to the founder, the Karnataka government has informed AIM that Pixxel had not applied to the industries department, which allots land. The company, according to the government, will apply for the same this week.

AIM reached out to Pixxel, but the company refused to comment.

The Big Picture

While Bengaluru remains the undisputed centre for space innovation and startups, states such as Andhra Pradesh, Gujarat, and Madhya Pradesh are aggressively courting manufacturers and launch companies with dedicated policies, land banks, and large-scale infrastructure projects.

For more than a decade, Karnataka has been synonymous with India’s space tech ambitions. The presence of the Indian Space Research Organisation (ISRO), a deep pool of aerospace talent, world-class research institutions, and a thriving startup ecosystem helped Bengaluru emerge as the launchpad for India’s private space revolution. Startups, including Pixxel, Bellatrix Aerospace, Agnikul Cosmos, and Skyroot Aerospace, among others, have benefited from the ecosystem built around ISRO and the city’s engineering talent base.

However, as India's private space sector matures from research and development to large-scale manufacturing and commercialisation, Karnataka is facing its first serious challenge from rival states eager to capture a share of the country's rapidly growing space economy.

Karnataka's Enduring Advantage

Industry leaders acknowledge that Bengaluru’s rise was no accident.

“Thanks to ISRO and HAL, they have already created a stable ecosystem of vendors who are capable of manufacturing aerospace and defence parts in Bangalore. That really has helped space tech companies kick off from there,” Yashas Karanam, Co-founder and COO of Bellatrix Aerospace, noted in a LinkedIn post.

The state has also moved proactively on policy. 

Karnataka released a five-year Space Technology Policy 2025–2030 aimed at capturing 50% of India's projected $22 billion space market by 2033 while targeting a 5% share of the global market. The policy seeks to establish Karnataka as a full-stack space hub spanning both upstream and downstream segments of the value chain.

Yet, despite these strengths, the nature of the industry is changing.

Mohandas Pai, Chairman, Aarin Capital, tells AIM that Karnataka has already lost several strategic industries to competing states over the past few years.

“We are losing. We lost the cloud business, everything, to Visakhapatnam and Bombay. We lost EV vehicles to Tamil Nadu. We lost the semiconductor thing to Gujarat and other cities,” he laments.

Pai also raises concerns about the state's fiscal priorities, arguing that excessive welfare spending has reduced the government's ability to invest in growth-oriented sectors.

“What happened in Siddaramaiah’s three years? [Former Karnataka Chief Minister Siddaramaiah] gave guarantees and spent ₹1,20,000 crore. Out of ₹1,20,000 crore, ₹60,000 crore was borrowed,” he highlights, referring to the state’s 2024–25 budgetary allocation for the government’s flagship welfare schemes.

According to Pai, this has limited the state's ability to fund critical infrastructure and development projects.

The Manufacturing Challenge

While innovation, software, satellite analytics, and deeptech R&D continue to thrive in Bengaluru, the next phase of growth requires something different: manufacturing infrastructure.

Companies moving from prototype development to commercial-scale production increasingly need large industrial land parcels, aerospace parks, testing facilities, faster clearances, reliable power infrastructure, and lower operating costs. This is where competing states are becoming increasingly aggressive.

Industry executives have repeatedly pointed to Bengaluru’s high land costs, traffic congestion, scarcity of large industrial plots, and longer project execution timelines as emerging bottlenecks for hardware-intensive businesses. As a result, Karnataka may continue to dominate innovation and research but risks losing manufacturing plants, assembly facilities, and space hardware production to rival states.

Andhra Pradesh's Space City Bet

Among Karnataka’s challengers, Andhra Pradesh has emerged as perhaps the most aggressive.

The state has rolled out Space Policy 4.0, targeting ₹25,000 crore in investments over the next decade while planning two integrated Space Cities in Lepakshi and Tirupati. It also targets creating 35,000 direct and indirect jobs, as well as a special purpose vehicle to coordinate infrastructure development, startup funding, and industry partnerships.

The government is actively leveraging its proximity to Sriharikota, India’s primary spaceport and launch site for ISRO’s major orbital missions, and offering ready-to-use industrial infrastructure to attract startups and manufacturers.

The state has also begun targeting next-generation launch companies.

When Jainul Abedin, Founder and CEO of reusable rocket startup Abyom SpaceTech, sought guidance for establishing a manufacturing facility, Andhra Pradesh minister Nara Lokesh publicly extended an invitation. 

“Andhra Pradesh’s Space City initiative is designed precisely for innovators like you—offering the infrastructure, ecosystem, and scale needed to turn ambitious ideas into global enterprises,” Lokesh said on X.

Proposed as the first space-focused industrial cluster, the Space City project is spread across 2,800 acres in Tirupati district. It is positioned as a hub for space research, satellite manufacturing, and advanced aerospace technologies. The contract to develop the space city was awarded to Hyderabad-based Skyroot Aerospace, which turned unicorn in May after raising $60 million.

Gujarat and Madhya Pradesh Join the Race

Meanwhile, Gujarat is also India's next major space tech manufacturing hub.

Building on its long-standing association with ISRO's Space Applications Centre (SAC), the state recently launched a dedicated SpaceTech Policy 2025–2030 focused on innovation, R&D, manufacturing, and commercialisation. The policy offers targeted incentives to attract companies involved in satellite systems, launch vehicle components, and advanced space technologies.

Rather than competing directly with Bengaluru’s startup ecosystem, Gujarat is seeking to dominate manufacturing and exports by leveraging industrial infrastructure, policy support, and its established engineering base.

Madhya Pradesh has also entered the competition with its SpaceTech Policy 2025, which adopts a comprehensive approach covering the upstream, midstream, and downstream segments of the space economy. The policy encompasses satellite and launch vehicle manufacturing, mission management, ground infrastructure, and the use of space data for governance, sustainability, and commercial applications.

A Multi-State Space Economy Emerges

The growing activity and rush to attract investments suggest that India’s space economy is no longer centred around a single geography. Instead, a specialised ecosystem is beginning to emerge.

Karnataka continues to lead in innovation, startups, AI, and R&D. Andhra Pradesh is positioning itself as a launch and infrastructure hub. Gujarat is betting on manufacturing and commercialisation, while states such as Telangana and Madhya Pradesh are building capabilities around aerospace, defence, and downstream applications.

“India needs more shared infrastructure to support early space tech companies,” former ISRO chairman S Somanath stated in a LinkedIn post. 

The question facing Karnataka is not whether it will lose its position as India's space tech capital. Its innovation ecosystem remains unmatched.

 The bigger question is whether it can retain leadership across the entire value chain as manufacturing, testing, and large-scale production increasingly migrate to states offering cheaper land, faster clearances, and dedicated infrastructure.