Space Sector And FDI In India – Inward/ Foreign Investment

In the last decade India has become a forerunner in not only
cost efficient and innovative space faring endeavors, but has also
provided a fitting regulatory environment for growing of space tech
startups like Astrogate Labs, Bellatrix Aerospace etc. Now to boost
India’s space tech story into the stratosphere, the government
on February 21, 2024 liberalized the FDI policy for the space
sector. This article delves into India’s current space sector,
examining the recent FDI policy amendment, its necessity and impact
on the industry and what the future holds for Indian Space
Sector.

FDI Amendment: 100% FDI in the Space sector

The FDI policy amendment marks a pivotal shift in India’s
approach to the space sector, dividing the satellite sub-sector
into distinct activities with defined limits for foreign
investment.¹ Earlier investment in
the Space sector was only possible through the government -
approved route. With the introduction of the new FDI policy, it has
bought along the ease of doing business and encouraging investment
through liberalization of the sector.

By allowing 100% FDI in the Space sector, the government has
opened a portal of investment opportunities for private and public
investors through liberalized routes:

• Up to seventy-four percent (74%) under automatic
  route: Satellite-manufacturing and operation, satellite
  data products and ground segment and user segment. Beyond the limit
  of seventy-four percent (74%) these activities are under government
  route.²




• Up to forty-nine percent (49%) under automatic
  route: Launch vehicles and associated systems or
  sub-systems, creation of spaceports for launching and receiving
  spacecrafts. Beyond the limit of forty-nine percent (49%), these
  activities are under government route.³




• Up to hundred percent (100%) under automatic
  route: Manufacturing of components and systems/sub-systems
  for satellites, ground segment and user segment. This increased
  private sector participation is expected to generate employment,
  facilitate technology absorption, and foster self-reliance,
  integrating Indian companies into global value chains.⁴

By collaborating with international players, India aims to
contribute significantly to the scientific advancements while also
bolstering its standing in the International Space sector.

Benefits of the FDI amendment

The introduction of these three routes through 100% FDI in the
Space Sector promises to unlock a plethora of benefits for the
budding private space industry

• More expertise, investment and technology inflow into the
  Indian Space Industry.




• Better Value chain addition.




• Ease of doing business for domestic as well as foreign
  players.




• Fillip to infrastructure development and ancillary
  industries.




• Increase in India’s share in the global space sector from
  USD $8.4 billion to USD $47.3 billion by 2032.⁵




• Ability to compete with Sector Leader like USA, Russia and the
  EU.




• Indian Startups, like pixxel, Skyroot Aerospace, AgniKul Cosmos
  etc through this amendment, would be able access a broader pool of
  funding.

Conclusion

The decision to permit 100% FDI in the space sector is a
watershed moment which holds the potential to allow the nation to
reach new heights in space exploration and technology.
Liberalization of investment, Signing of Artemis Accords⁶ and Indian Space policy 2023 has
created a trifecta of opportunities for the sector, landing
India’s space story in a goldilocks zone of opportunities. with
increasing interest of all stake holders in India’s space
sector, it is now time for the government to ponder over the need
for a codified space law, to provide reassurance and protection to
the domestic as well as the foreign investing entities.⁷

Ritwik Maini, Intern at S.S. Rana & Co. has assisted in
the research of this Article.

Footnotes

1 https://timesofindia.indiatimes.com/india/govt-eases-fdi-norms-in-space-allows-100-foreign-investment-for-making-sat-components/articleshow/107892575.cms

2
https://pib.gov.in/PressReleaseIframePage.aspx?PRID=2007876

3 https://pib.gov.in/PressReleaseIframePage.aspx?PRID=2007876

4 https://pib.gov.in/PressReleaseIframePage.aspx?PRID=2007876

5 https://ssrana.in/articles/need-comprehensive-space-law-india/

6 https://www.barandbench.com/law-firms/view-point/indias-strategic-move-signing-the-artemis-accords-propels-space-exploration-ambitions-beyond-the-moon-agreement

7 https://ssrana.in/articles/need-comprehensive-space-law-india/

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