India opens up space sector to global investors

India has amended rules to allow 100% foreign direct investment (FDI) in the space sector in a move to attract potential investors to invest in Indian companies, the government said. 

As per the amended policy approved by the Union Cabinet on Wednesday, FDI thresholds have been eased for various sub-sectors and activities. The satellite sub-sector has been divided into three different activities with defined limits for foreign investment in each such sector.

Up to 74% FDI is allowed under automatic route for satellite manufacturing and operation, satellite data products, and ground segment & user segment. Beyond 74%, these activities are under the government route.

For launch vehicles and associated systems or subsystems, and the creation of spaceports for launching and receiving spacecraft, 49% FDI is allowed under automatic route. For an FDI beyond 49%, they are under the government route.

The government notified that up to 100% under automatic route is permitted for the manufacturing of components, systems, and sub-systems for satellites, ground segment, and user segment.

“The liberalized entry routes under the amended policy are aimed to attract potential investors to invest in Indian companies in space,” a government press release said.

“This increased private sector participation would help to generate employment, enable modern technology absorption, and make the sector self-reliant. It is expected to integrate Indian companies into global value chains. With this, companies will be able to set up their manufacturing facilities within the country duly encouraging ‘Make In India’ and ‘Atmanirbhar Bharat’ initiatives of the government,” it added. 

Department of Space consulted with internal stakeholders like IN-SPACe, ISRO, and NSIL as well as several industrial stakeholders before the decision to amend the FDI policy was taken.

“NGEs have developed capabilities and expertise in the areas of satellites and launch vehicles. With increased investment, they would be able to achieve sophistication of products, global scale of operations, and enhanced share of global space economy,” the government said.

Earlier last year, the Indian Space Policy 2023 was notified to promote private participation in the space sector.

India’s private space industry, however, had been seeking changes in FDI rules to propel the investment in the sector. 

The Indian Space Association (ISpA) thanked the government for the “forward looking decision of a liberal FDI policy” for the space sector. 

“The pace of government’s forward-looking reforms are heartening and will pave the way for growth in this nascent sector,” the industry body said. 

“This will give India access to the latest tech advances and much-needed funds, not only from the country but from international investors too,” AK Bhatt, director general of the ISpA was quoted as saying by Reuters. 

India currently accounts for about 2-3% of the overall space economy ($8.4 billion) and is projected to grow to about $44 billion by the year 2033.

As per the DPIIT start-up India portal, the number of space start-ups has gone up from just one in 2014 to 189 in 2023. The investment in Indian space start-ups has increased to $124.7 million in 2023.