India Embraces Stars: Government Reforms Foreign Direct Investment Policy to Bring in Space Sector Investments

On February 21, 2024, the Union Cabinet, led by Prime Minister Narendra Modi, approved an amendment to the Foreign Direct Investment Policy for the space sector. The amendment allows 100% investment through three liberalised entry routes.

Space exploration experts in India have praised the government’s recent initiative to bring some much-needed clarity to foreign investments in the Indian space sector. They talked about how the newly defined routes for investments will attract more global investors and help India stay competitive in the market. Over the past decade, many international investors have shown increasing interest in the Indian markets due to the country’s favourable demographics, structural reforms, and pro-economic policies. India’s focus on infrastructure development has strengthened its role in the global supply chain, making it a more efficient business environment.

Indian Becomes Intergalactic 

The amendments are a game changer in the investment sector and are being seen as an enabler of all sorts. It is poised to increase the private sector by generating employment, becoming compatible with modern tech, making the space sector more reliant, and integrating it with global space missions.

The following is a detailed guide on India’s amended FDI policy for the space sector, which now offers three key liberalised entry routes:

1. Up to 74% FDI under Automatic Route, which applies to the following activities:

– Manufacturing and operation of satellites.

– Creation and distribution of data derived from satellite operations.

– Establishing and operating ground infrastructure for satellite communication and user terminals for accessing satellite services.

2. Up to 49% FDI under Automatic Route, which applies to the following activity:

– Manufacturing and operation of launch vehicles and associated systems or subsystems.

3. 100% FDI under Government Approval Route, which applies to the following activity:

– Setting up and operating facilities for launching and receiving spacecraft.

Opening Doors To Opportunities

India’s recent reforms have brought a glimmer of hope for the country’s next spaceport, in addition to the Satish Dhawan Space Centre (SDSC) SHAR, which is currently operated by the Indian Space Research Organisation in Shriharikota. As the Indian space agency continues to increase its launching activities, experts predict that future investments will pave the way for the development of new spaceports across the country. The demand for communication and observation technology in India is enormous, which is why investments are required to enable ISRO to focus on research and development. Meanwhile, other players can contribute by offering essential services such as the construction of new infrastructure.

SpaceX and TATA Collaboration Set a Wonderful Precedent

Recently, American aerospace giant SpaceX has collaborated with Tata Advanced Systems to launch a radar imaging satellite from India. Tata Advanced System Limited manufactures the satellite, and it will be launched from Elon Musk’s SpaceX facility in Florida in April this year. The launch aims to enhance India’s surveillance capabilities by adding a new radar imaging satellite to the RISAT fleet. It adheres to the principles of indigenous aerospace manufacturing and will be operated from Bengaluru, Karnataka, ensuring India’s operational secrecy.

The new reforms are expected to increase private sector participation, which will lead to the creation of jobs, faster adoption of modern technology, and self-sufficiency in the sector. The reforms are also expected to integrate Indian companies into global value chains. This will enable companies to establish their manufacturing facilities within the country, thereby supporting the ‘Make In India (MII)’ and ‘Atmanirbhar Bharat’ government initiatives.

Read more: Ladakh’s Quest For Sixth Schedule Status