This centre will also hand-hold, promote and guide the private industries in space activities through encouraging policies and a friendly regulatory environment, Singh added.
The 'New Space India Limited (NSIL), a PSU under the Department of Space, will endeavour to re-orient space activities from a 'supply driven' model to a 'demand driven' model, thereby ensuring optimum utilisation of our space assets, the minister said.
The Cabinet decisions come weeks after Finance Minister Nirmala Sitharaman announced opening up of the space sector for private entities.
Some of the planetary exploration missions will also be opened up to private sector through an 'announcement of opportunity' mechanism, a government statement said.
"This will not only result in an accelerated growth of this sector but will enable Indian Industry to be an important player in global space economy. With this, there is an opportunity for large-scale employment in the technology sector and India becoming a global technology powerhouse," it said.
The proposed reforms will enhance the socio-economic use of space assets and activities, including through improved access to space assets, data and facilities.
These reforms will allow ISRO to focus more on research and development activities, new technologies, exploration missions and human spaceflight programme, Singh said.