by Daniel Stasey

NEW DELHI—India is going up against China in a new Asian space race, trying to tighten its control of regional skies and alliances by leveraging its ability to send satellites into orbit inexpensively.

In recent rounds of space diplomacy, China offered to build telecommunications satellites for Sri Lanka, Afghanistan and Nepal. In May, India went a step further, launching its “South Asia Satellite,” which those three countries can use at no cost.

At stake in the contest is regional leadership, as India has the opportunity to be the power that helps its neighbors develop their own space ambitions, steering them away from Beijing’s influence.

Next year, India plans to activate its version of the Global Positioning System, which it has also offered to share with its neighbors. Meanwhile, China is expanding a rival fleet of navigation satellites that will be over four times the size of India’s to cover the countries along its “One Belt, One Road” infrastructure corridors by 2018.

Last year, India started construction on a satellite ground station in Vietnam, to complement others in Brunei, Indonesia, and Mauritius. The deal riled China. State media said the facility could be employed for military purposes to monitor the South China Sea.

In the next five years, India plans to spend over $6 billion on its space program and send 25 rockets into space, three times the budget and number of rockets as a decade ago. China sent almost the same number of rockets into space last year alone and doesn’t disclose its space budget.

The U.S. space budget of almost $40 billion a year is more than six times China’s assumed budget, according to the most-recent figures from the Organization for Economic Cooperation and Development. China has overtaken Russia and is just behind the European Union in spending, and last year launched more rockets than Russia for the first time.

Beijing is also on track to open its Tiangong-3 space station in 2022, which it is offering to open to other countries. The international space station is expected to close around then.

In addition, China outpaces India in sophistication. This month it successfully tested a quantum satellite, sending light particles over distances that even the U.S. and Europe have yet to achieve. India’s recent test satellites have focused on improving lenses for its satellite cameras.

“Most of India’s recent space diplomacy has been a rear-guard action against China,” said Vidya Sagar Reddy, an analyst at the Observer Research Foundation, a New Delhi think tank.

India is also facing new competition from Elon Musk’s SpaceX, and Richard Branson-backed OneWeb Ltd., which are offering to make space launches and satellites cheaper than ever. And China has been offering support to local startups such as OneSpace and ExPace.

In response, the Indian Space Research Organization is trying to rapidly increase the rate of rocket launches by offering its technology to the private sector.

This year, it announced plans to sell its small launch rocket, the PSLV, to a new private joint-venture company by 2020. It is also planning to license production of the larger GSLV rockets it is testing to local industrial firms, as well as to outsource the design and production of its smaller navigation and remote-sensing satellites, a senior space-agency official said.

India is also letting local startups launch payloads from its rockets for the first time and seeking to support companies that can sell India’s capabilities to its developing neighbors.

In December, Team Indus, a Bangalore-based startup, aims to be the first private Indian company to send something into space from an ISRO rocket when it launches a moon lander as part of the Google Lunar XPrize competition. Team Indus is also designing a standardized satellite that it hopes to sell to other countries.

“I see India as a leader for providing space technology in developing markets,” said Rahul Narayan, one of Team Indus’s founders.

Astrome Technologies Pvt., another Indian startup, plans to launch 150 satellites to provide wireless internet to places difficult to reach with cables such as Indonesia’s archipelagos and Bangladesh’s river deltas. China launched an experimental satellite this year that it says can beam internet into remote areas.

Astrome hopes to fend off Chinese competition by highlighting concerns about internet security.

India’s main edge is cost. Engineers there are often paid $1,000 a month, around a 10th of wages in the U.S. and Europe, and companies have been able to innovate frugally.

Bellatrix Aerospace Pvt., founded by 25-year-old Rohan Ganapathy, developed an experimental thruster based on research from Pennsylvania State University.

Bellatrix fabricated parts using automotive manufacturers and assembled them in a warehouse it converted into a vacuum chamber. The company demonstrated its technology to the ISRO’s top scientists last year by firing up its thruster on a boardroom table.

If their design had malfunctioned, the high-voltage thruster could have electrocuted people in the room, Mr. Ganapathy said.

Instead, Bellatrix was awarded a contract to design the ISRO’s next generation of electric thrusters.