India’s Space Sector Gears up for Growth After Foreign Investment Reform

Written by staff writer.

An Indian government decision to relax direct foreign investment rules in the country’s space industry will be pivotal to achieving an 8% global market share of the space sector by 2033, according to leading local space entities.

In February, India amended its direct foreign investment rules surrounding the space sector. Until now, it has only been allowed with government approval. But critics said the rule held back the growth of India’s space industry.

However, the reforms will liberalise and clarify the existing rules. Under the new regime, manufacturers of satellite components, their systems/subsystems, and associated ground systems and user systems can secure 100% direct foreign investment without government approval.

Local manufacturers and operators of satellites, satellite data products, and associated ground and user systems will be able to obtain 74% direct foreign investment without government approval. The residual 26% remains subject to government approval.

Manufacturers of spaceports, launch vehicles and associated systems or subsystems, can secure 49% of their funding through direct foreign investment without government approval, with the remaining 51% still requiring clearance.

“(The) Department of Space consulted with internal stakeholders like IN-SPACe, ISRO and NSIL as well as several industrial stakeholders,” reads an Indian government statement. “Non-government entities have developed capabilities and expertise in satellites and launch vehicles. With increased investment, they would be able to achieve sophistication of products, global scale of operations and enhanced share of global space economy.”

India’s space industry shot to prominence last August when it executed a soft landing of a spacecraft near the Moon’s unexplored South Pole region – the first country to touch down in the zone.

The country’s space sector is presently valued at around USD8.5 billion, constituting around 2% of the global space economy. On its current trajectory, the domestic space sector’s valuation is tipped to reach approximately USD44 billion by 2033, or 8% of the global space economy.

The Indian Space Association (ISpA) praised the amendments. “ISpA is thankful to the Indian government for today’s forward-looking decision of a liberal direct foreign investment policy for the space sector,” the non-profit industry group said on social media. “The pace of government reforms is heartening and will pave the way for growth in this nascent sector. We project the higher direct foreign investment levels and overseas capital participation to catalyse USD4 – 5 billion into India’s space industry over the next three to five years.”

New Space India (NSIL) was similarly happy about the changes. “NSIL welcomes the Union Cabinet’s approval to amend the foreign direct investment policy for the space sector,” it said via social media. “This move opens up newer avenues for investment in Indian space sector, paving the way for increased private participation.”

Minister of State for the Ministry of Science, Jitendra Singh, who is responsible for the space industry, called the amendments a landmark decision “which will boost India’s space economy and enable it to contribute to the growth.”


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