India Allows 100% FDI In Space Sector

The Union Cabinet has eased regulations to allow 100% foreign direct investment (FDI) in the country’s space sector. The relaxation of entry barriers, as outlined in the amended policy, is expected to attract investors to Indian space companies.

India Allows 100% FDI In Space Sector

The Union Cabinet has eased regulations to allow 100% foreign direct investment (FDI) in the country’s space sector. The relaxation of entry barriers, as outlined in the amended policy, is expected to attract investors to Indian space companies. Under the revised policy framework, foreign direct investment up to 100% via the automatic route will now be permissible for the manufacturing of components, systems, or sub-systems related to satellites, ground segments, and user segments.

For satellite manufacturing and operations, satellite data products, ground segments, and user segments, up to 74% FDI under the automatic route will be permitted. Any investment beyond this threshold will necessitate government approval. Likewise, for launch vehicles, spaceports, and associated systems or subsystems, up to 49% of FDI will be allowed through the automatic route.

Crucial stakeholders, including the Department of Space, IN-SPACe, ISRO, NSIL, and various industrial entities, were extensively consulted in the formulation of this policy amendment. The initiative is anticipated to bolster the capabilities of Indian companies in the space sector, fostering innovation, technology absorption, and self-reliance. Moreover, increased private sector involvement is poised to integrate Indian firms into global value chains, thereby bolstering initiatives like ‘Make in India’ and ‘Atmanirbhar Bharat’.

Pawan Chandna, co-founder and CEO of one of the upcoming launch providers, Skyroot Aerospace, said, “It gives much needed regulatory clarity for foreign investments for all domains in India’s space sector. For Skyroot being in the launch vehicle domain, 49 % FDI in the automatic route and 100 % FDI in the government route will help boost investments and open access to capital easier and at par with global standard. The policy also clearly states that this 49 % cap is applicable to building of new spaceports in the country. At present, there is only one spaceport, the one operated by ISRO in Sriharikota.

Currently, India’s space industry contributes approximately $7 billion to the national GDP and employs over 100,000 skilled professionals across various disciplines. With the implementation of liberalised FDI policies, experts predict a substantial uptick in these figures, with projections suggesting a potential GDP contribution of $50 billion by 2030 and the creation of over 500,000 new jobs in the space sector. The current changes to the FDI policy approved by the cabinet are in line with the Indian Space Policy of 2023. India aims to capture a larger chunk of the global space market. While India is a major space-faring nation, it accounts for only 2 percent of the international commercial market. Rapid strides have been made in the three years since the space sector was opened up to private players, with over 100 startups emerging in the field.