In 2020, India liberalized its space sector, permitting private firms to engage in satellite and rocket production and launches, and granted them access to ISRO’s infrastructure. Concurrently, IN-SPACe was set up to foster and oversee the private space industry’s operations.
Later, in April 2023, the Indian Space Policy 2023 was introduced permitting non-governmental entities to undertake end-to-end activities in the space sector. This included establishment and operation of space objects, ground-based assets and related services such as communication, remote sensing, navigation, etc. Under such policy, non-governmental entities are empowered to provide space communication services globally, set up and manage ground stations, utilize orbital resources for deploying space assets, operate remote sensing satellites, and distribute the data they collect, both domestically and internationally.
In a significant development in this direction, the Union Cabinet, on February 21, 2024, approved the amendment to the Foreign Direct Investment (FDI) Policy to allow up to 100% FDI in the space sector through the automatic route. Before this amendment, FDI was permitted in the establishment and operation of satellites through the government approval route only.
The amended FDI Policy divides the satellites sub-sector into three different sets of activities with defined permissible FDI limits for each set of activities:
| Category | % FDI | Route |
| Satellites-manufacturing & operation, satellite data products and ground segment & user segment | Upto 74% | Automatic |
| Launch vehicles and associated systems or subsystems, creation of spaceports for launching and receiving spacecraft | Upto 49% | Automatic |
| Manufacturing of components and systems/ sub-systems for satellites, ground segment and user segment | Upto 100% | Automatic |
FDI beyond the limits prescribed for the first two sets of activities above can be made under the government approval route.
This step contributes to the government’s efforts to increase investment in the space sector. Consequently, it would help to generate employment, enable modern technology absorption, and make the sector self-reliant. Hope such enhanced private participation unlocks Indian space sector’s potential as envisioned under Indian Space Policy 2023.
Having said that, adaptability for an ever-evolving sector, synchronicity with ancillary laws and regulations, more specifically the Geospatial Guidelines, 2021, clarity on existing FDI in the two restricted categories, i.e., need for post-investment approval, if any, are some key persisting issues. The government’s approach to these and further clarifications, if any, issued in this respect would be interesting to look out for.