India has recently updated its official rules in the space sector to attract global investors and companies, following its decision to open the sector to private players four years ago. The new foreign direct investment (FDI) policy has raised limits on foreign investment, potentially sparking renewed interest in the South Asian space community.
Both private and public actors in India have been working to increase participation in the country’s space sector. The Indian Space Research Organization (ISRO) has also achieved significant milestones in recent months, such as the successful moon landing of its Chandrayaan-3 spacecraft and a partnership with NASA to join the Artemis Accords. However, restrictions on foreign direct investments have limited the country’s ability to attract international investors, causing delays in funding for some of India’s growing space tech startups.
On Wednesday, the Indian cabinet, led by Prime Minister Narendra Modi, approved an amendment to its FDI norms to allow increased overseas investment in the space sector, in some cases up to 100%. The Indian government has defined three different categories under the amended policy:
- Up to 49% (foreign ownership) for launch vehicles and associated systems and subsystems, creation of spaceports for launching and receiving spacecraft
- Up to 74% for satellite manufacturing and operation, satellite data products and ground segment and user segment
- Up to 100% for manufacturing components and systems and subsystems for satellites, ground segment and user segment
Foreign investments beyond these thresholds require government approval.
In June 2020, the Indian government passed its space sector reforms and established a new agency, the Indian National Space Promotion and Authorization Center, to allow private companies to use ISRO resources and infrastructure. Additionally, the country introduced its space policy last year to provide guidelines and rules for private participation. New Delhi also replaced its century-old rules with a new telecom act to enable the groundwork for global satellite-based broadband service providers, including Elon Musk’s Starlink.
India is home to approximately 190 space tech startups, offering solutions including launch vehicles, space situational awareness, and hyperspectral imagery. Government data shows that investments in Indian space startups reached over $124 million last year. The country’s space economy is projected to reach $44 billion by 2033 from $8.4 billion last year.
The Indian Space Association, an industry body that represents space tech startups and private companies, expects the updated FDI norms to help boost India’s presence in the global space economy, from its current share of just over 2%.
