MUMBAI: India will set up a 10 billion rupee ($119 million) venture capital fund to expand its space sector, Finance Minister Nirmala Sitharaman said on Tuesday, as the country sets its sights on a larger share of the global space market.

Earlier this year, Prime Minister Narendra Modi's government allowed 100% foreign direct investment in the manufacture of satellite systems without official approval and eased the rules for launch vehicles.

"With our continued emphasis on expanding the space economy by five times in the next 10 years, a venture capital fund of ` 1,000 crore (10 billion rupees) will be set up," Sitharaman said in her budget speech in parliament.

India has privatised space launches and is aiming for a five-fold increase in its share of the global launch market, which some expect to be worth $47.3 billion by 2032. India currently accounts for about 2% of the space economy.

Private space firms welcomed the setting up of the fund, saying it would catalyse more investment into the sector.

"The announcement of a ₹1,000 crore VC fund is a step forward, addressing the funding challenges faced by these nascent ventures in this capital-intensive domain," A.K. Bhatt, director general of the Indian Space Association, said in a statement. ($1 = 83.6899 Indian rupees) (Reporting by Shilpa Jamkhandikar and Nivedita Bhattacharjee; Editing by Jacqueline Wong)