FDI IN SPACE SECTOR

Posted 15 Mar 2024

3 min read

Why in the news?

Government recently relaxed rules to allow 100% foreign direct investment (FDI) in space sector.

Existing FDI policy in Space sector: Earlier, FDI was permitted in the establishment and operation of Satellites through the Government approval route only.
Amended FDI policy:
- 100% FDI is allowed in space sector in line with the vision and strategy under the Indian Space Policy 2023.
  - The liberalized entry routes are aimed to attract potential investors to invest in Indian companies in space.

Integration withglobal value chains: The FDI policy reform is expected to integrate Indian companies into global value chains.
Indigenisation: Enabling modern technology absorption, and making the sector self-reliant, encouraging Make in India and Atmanirbhar Bharat initiatives of the Government.
Focus on R&D: Reforms allow ISRO to concentrate on cutting-edge research and development, exploration missions and human spaceflight programme.
Enhance Ease of Doing Business: Set to lower entry barriers for foreign players, fostering a more inclusive environment for international investments, technology transfers, and collaborative research in space technology.
Greater FDI inflows: It will contribute to growth of investment, income and employment.
- In 2021-22, ₹ 175 Crore was generated towards export of launch services, data sales and in-orbit support services and post-launch operations.
Enhance share in global space economy: With increased investment, India would be able to achieve sophistication of products, global scale of operations and enhanced share of global space economy.
- Currently, India accounts for only around 2-3 % of the global space economy ($8.4 billion), much behind the major players such as the US and China.

Indian Space Association (ISpA): Launched in 2021, it is the apex, non-profit industry body exclusively working towards successful exploration, collaboration, and development of private and public Space Industry in India.
Antrix Corporation Limited: Incorporated as a marketing arm of ISRO. It handles ISRO’s commercial deals for satellites and launch vehicles with foreign customers.
The Indian National Space Promotion and Authorization Centre (IN-SPACe): An autonomous nodal agency to facilitate private sector engagement in space activities.
To encourage private investment, the government has also exempted private launch service companies from paying GST when they launch satellites.
India space policy 2023 suggests that the private sector is a critical stakeholder in the entire value chain of the space economy.

Regulation: To compete globally, India requires the Space Activity Bill to be passed, fostering a thriving space industry and advancing participation in the global space economy.
Technological Advancement: Collaborate with the IT sector to leverage India's expertise in information technology for space applications.
Technology Transfer: Facilitate technology transfer from ISRO to the private sector, particularly for initiatives like the Small Satellite Launch Vehicle (SSLV).
Focus on Affordability and Accessibility: Develop business models that make space solutions affordable and accessible to millions, addressing ground infrastructure and connectivity needs.
International Collaboration: Foster partnerships with global space agencies (E.g.: India joined Artemis Accords in 2023) and industry players to leverage expertise and resources.