India’s ₹500 Cr Space Insurance Plan Has a Much Bigger Problem

India’s private space economy is growing, with around 440 space technology startups now registered nationwide. Private companies are building launch vehicles, satellites, Earth observation systems, and orbital infrastructure.

But those space missions also have a hidden cost of mission failure. Under the 1972 Liability Convention, India remains responsible for damage caused by space objects launched from the country. This responsibility applies even when private companies conduct the missions.

IN-SPACe has therefore proposed third-party insurance for launch operators, capped at ₹500 crore. The cover would address damage to people, property, or other space objects caused by space activities. This is separate from mission insurance, which protects the operator’s own rocket or satellite.

But industry responses suggest that the headline figure of ₹500 crore is not the main financial threat facing India’s space startups. It’s much bigger—whether India’s domestic capacity can underwrite such risks 

The ₹500 Cr Insurance is Not the Cover

According to the latest figures from Orbital Radar, a space intelligence platform, there are over 16,000 satellites currently operating in low Earth orbit. According to some estimates, only 5–7% of them are insured.

According to Eshaan Bansal, Legal Counsel and Research Fellow at think-tank Spaceport SARABHAI, this is because launch-risk insurance can cost 25–30% of the insured value. In-orbit insurance can cost another 12–15%. 

“If I’m building a rocket at ₹100 crore, I don’t want to pay ₹30–35 crore just to insure it,” Bansal tells AIM. That can materially change a mission’s economics.

The problem compounds for startups with limited flight histories. Insurers have less data to assess their vehicles. Investors also risk losing years of capital after one failed mission.

Recent events have already exposed this risk. The PSLV-C62 failure in January left ISRO’s EOS-N1 satellite and 15 co-passenger payloads unable to reach orbit. Almost all payload owners reportedly had no insurance to cushion those losses.

EON Space Labs Founder and CEO Sanjay Kumar cautions that the ₹500 crore proposal should not be treated as a cost. The premium represents only a fraction of the cover, while third-party liability insurance remains cheaper than launch or hull insurance.

Kumar also argues that not all space launches are equally risky, depending on size, purpose, design, and potential consequences. The primary risk assessment is done by calculating maximum probable loss, which considers factors such as debris footprint, what survives re-entry, and population density below the flight path.

So, a small CubeSat will not have the same risk profile and operational impacts as a large satellite, and therefore should not face the same insurance requirement. “The calculation methodology should be transparent,” Bansal adds.

Insurance Capacity Problem

Even when companies want cover, India still lacks enough domestic capacity to underwrite space risks. Kumar says Indian operators depend heavily on foreign reinsurance, especially approaching London. However, that means rocket or launch failures elsewhere dictate Indian premiums.

The government says space insurance products already exist in India. Indian insurers work with global insurers, reinsurers, underwriters, and brokers to distribute these risks.

The global market itself remains volatile. Aon’s Q1 2026 Space Insurance Market Report shows premiums for global space risks attaching during 2025 exceeded $650 million. Claims stood at about $503 million. In 2023, premiums were around $550 million against claims of about $1.43 billion. That gap shows why insurers remain cautious about space risks.

The challenge will grow as more private companies launch satellites.

India already faces rising collision risks in low Earth orbit. The government said 20 of India’s 22 active LEO satellites face higher collision risks. ISRO carried out 20 collision avoidance manoeuvres in 2025 and another nine in 2026 so far.

Anirudh Sharma, Founder and CEO of Digantara Industries, says insurance pricing must reflect this orbital reality. Better data on orbital congestion, past conjunctions, manoeuvrability, and collision avoidance could help insurers assess individual satellites more accurately. 

Operators investing in safer systems could then demonstrate lower risk and potentially secure better insurance terms. That could make space situational awareness more than a safety tool. It could become part of how insurers price space assets.

Who Pays When the Money Runs Out?

The biggest policy gap sits beyond the proposed insurance ceiling. India’s third-party liability requirement would determine how much private operators must insure. It would not, by itself, erase India’s obligations under international space law.

“Under the liability convention, the liability is unlimited,” Bansal says.

A major accident could therefore create claims that exceed the private insurance cover. The US, UK and Australia use different forms of tiered liability structures. In the US, operators insure against a calculated maximum probable loss. The government then provides support above that level.

He believes India could consider a similar approach by creating a shared pool for catastrophic space risks. Bansal points to India’s nuclear liability pool as a possible precedent. Different insurers contributed about ₹1,500 crore to cover gaps in nuclear liability. 

He also suggests catastrophe bonds and insurance-linked securities. GIFT City and its International Financial Services Centre could provide access to global capital for such structures.

The risks will also extend beyond launches. OrbitAID Aerospace Founder and CEO Sakthikumar R says traditional space insurance was built around launch failure and early-orbit problems. In-orbit servicing introduces new questions over who caused the damage.

A servicing spacecraft could inspect, dock with, or refuel another satellite. A failure could involve the servicer, the client satellite, the operator, software, or an unexpected conjunction. Debris can also create risks for several operators at once.

Better tracking, collision avoidance, servicing and safe disposal could eventually lower those risks. Insurers, however, need enough operational data before they can reward such measures with lower premiums.

India’s new IN-SPACe re-entry guidelines already require operators to assess survivability, fragmentation, casualty risk, and potential impact zones. They also require operators to cover liabilities linked to re-entry activities.

For now, the ₹500-crore third-party liability proposal is a step towards making private space operators share the financial risk of their activities. The larger challenge is building an insurance market that can price those risks and provide enough capacity.

India’s private space race may depend on getting that balance right. The public needs protection, while companies need affordable insurance.