India became the first country to land near the south pole of the Moon with the historic Chandrayaan-3 program. This achievement has brought increased global attention to the country’s burgeoning space sector. 

With the unveiling of The Indian Space Policy 2023, the Government of India shared a regulatory framework for space activities in the country. The vision is to unlock the true potential in India’s space industry by promoting greater private participation. The policy also aims to grow commercial investments and strengthen international relations. The integration of foreign investment in the space sector and sub-sectors would also relieve the latter from their massive dependency on public funds.

Until now, the Indian Space Research Organisation (ISRO) has been leading this arena, with the  private sector participation mainly occurring through ISRO’s supply chain. In February 2024, amendments to relax the Foreign Direct Investment (FDI) policy in the space sector were announced in order to make it more lucrative for potential foreign investors. The Department of Space consulted with internal stakeholders like IN-SPACe, ISRO, NSIL, and several industrial stakeholders before arriving at this decision.

As a result of the revision, the sector has been further segregated into three categories, each with specified limits for foreign investment:

  1. Upto 74% under Automatic route: Satellites-Manufacturing & Operation, Satellite Data Products and Ground Segment & User Segment. Beyond 74% , these activities are under government route.
  2. Upto 49% under Automatic route: Launch Vehicles and associated systems or subsystems, Creation of Spaceports for launching and receiving Spacecraft. Beyond 49%,  these activities are under government route. 
  3. Upto 100% under Automatic route: Manufacturing of components and systems/ sub-systems for satellites, ground segment and user segment.

Additionally, the investee  must also consistently comply with the guidelines issued by the Department of Space as they are updated over time.

Why should you be interested?

India is poised to become a hub for space exploration. The area is  rapidly expanding and is on the course to offer significant opportunities for investment and growth. Consequently, there are abundant opportunities for collaboration between Indian companies and  international investors.

As the demand for space-related services and technologies increases, investors have the potential for significant returns on their investments. In the years to come, there is also a scope to connect with the larger global supply chains via India’s growing space ecosystem. Moreover, the Indian government is actively promoting the space sector, providing a favorable environment for investment.
However, there is still some time for the revision to be incorporated into the detailed FDI policy framework. The stakeholders as well as all interested parties have their eye on the more detailed version of the policy that is to follow. The revised policies will prove to be a catalyst in revolutionizing the Indian space sector. With domestic and foreign investments bolstering the scope of the field, we are in for a very exciting future ahead.

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