In the words of the former President of the United States of America ("USA"), J. F. Kennedy, "The exploration of space will go ahead, whether we join in it or not, and it is one of the great adventures of all time, and no nation which expects to be the leader of other nations can expect to stay behind in the race for space."1 On the eve of India's second lunar exploration mission, an assessment of the Indian Space Policy 2023 ("Space Policy"), from the perspective of the Indian software and hardware manufacturing sector is appropriate. Through this article, we aim to touch briefly upon the origins of the Space Policy, the opportunities and challenges it presents to the Indian industry, and how Foreign Direct Investment ("FDI") can be utilised to make the most of the opportunities and overcome some of the challenges.

The Space Policy, released by the Indian Space Research Organization ("ISRO"), is seen as a significant step towards India's progression into a new era of space exploration. This step is aligned with the direction of the government, as echoed by the present Principal Scientific Advisor to the Government of India, "the space sector is witnessing what the Information Technology Sector experienced in the 1990s. We will have our own Space X in the next 2 years."

The success of Indian space technology has attracted international interest and attention. India has overcome various hurdles in the development of space technology by deploying its expertise and making both cost and time efficient use of its resources to propel Indian space scientists to the forefront of the league of international spacefaring nations. However, the Space Policy has been silent on opportunities that FDI will present in this sector of Indian industry, and how the government plans to harness them. This article analyses the Space Policy from an FDI lens to recommend foreign direct investment in the Indian space industry, and further discusses why FDI rules are critical to the success of the Space Policy.


The belief in Indian space capabilities has been growing since the 1960s, when India began taking many legal and technical strides in space exploration, navigation, and innovation. India has steadily developed its capabilities in satellite technology, remote sensing, and launch vehicle systems, establishing itself as a significant player in the global space arena.

The newly minted Space Policy is an outcome of India's self-reliant attitude towards space technology development. It also focuses on the development of space as an industry, instead of merely a scientific endeavor. Notably, until the 1990s, the space industry in India was predominantly defined by ISRO, with limited involvement of the private sector. The private sector was predominantly engaged in building both spacecrafts and ancillary components critical for space infrastructure according to ISRO designs and specifications. The Space Policy aims to foster a more independent approach by allowing private enterprises to carry out end-to-end activities2 in space, including launching satellites and rockets, and operating earth stations.

In the past, India has made efforts to reform its space sector. These include the introduction of the First Satellite Communication Policy in 1997, which provided guidelines for FDI in the satellite industry but did not generate much enthusiasm. The Remote Sensing Data Policy was introduced in 2001 and amended in 2011, followed by the introduction of the National Geospatial Policy in 2016, which was further liberalized in 2022. A draft Space Activities Bill was brought out in 2017 but lapsed in 2019. The government has not yet introduced a new bill addressing space activities, apparently relying instead on the Space Policy released by ISRO.


Any policy governing India's space exploration must take due cognizance of the contribution and role of the private sector in helping India develop eminence at this frontier. Introducing private players into the space sector is crucial for several reasons. India lags in the global space economy, accounting for only about 2%3 of it, despite being amongst the few spacefaring nations. By harnessing the full potential of the space sector, India could significantly boost its economy, with estimates suggesting that the Indian space industry could grow to USD 60 Billion by 2030 and create more than 2,00,000 (two lakh) jobs.4

Private companies have revolutionized the space sector globally, reducing costs and turnaround time. However, in India, private players have been limited to being vendors or suppliers to the government's space program. Introducing private sector participation in this area would reduce dependence on foreign entities for earth observation data, promote self-reliance (Aatmanirbharta), foster entrepreneurship in the space sector, and could also bolster national security.

The Space Policy includes several key highlights. It establishes the Indian National Space Promotion and Authorisation Centre ("InSPACe") as a single-window clearance and authorisation agency for space launches and other activities. The policy also creates New Space India Limited ("NSIL") to commercialize space technologies and platforms, and rationalizes the role of ISRO, focusing on research and development while transferring mature systems to industries for commercial usage.

The policy document defines non-governmental entities ("NGEs") as "(i) a company incorporated under the Companies Act, 2013 or (ii) a partnership firm established under the Limited Liability Partnership Act, 2008, (iii) Trusts under the Indian Trusts Act 1882 or (iv) Association of persons or body of individuals incorporated under relevant statutes in India." This definition firstly, sends out a signal to Indian industry that their role in India's space exploration agenda is now being actively sought. Secondly, a definition as measured as this one also leads to a legitimate expectation that the Space Policy will dovetail with measures by the Ministry of Commerce and Industry, as well as the Ministry of Corporate Affairs to better enable NGEs to fully participate and contribute to the development of the Indian space sector.

Other participants and their roles have also been carved out in the policy, such as the role of NSIL, ISRO's commercial arm, and InSPACe which is intended to function as an autonomous government organization, mandated to promote, hand-hold, guide, and authorize space activities in the country. The policy allows NGEs to undertake end-to-end activities in the space sector, including establishing and operating space objects, ground-based assets, and related services. The NGEs can design and operate launch vehicles, make filings with the International Telecommunication Union ("ITU"), and engage in commercial recovery of asteroid resources. This creates opportunities for the private sector to participate in various space-related activities and to contribute to the growth of industry. However, FDI in the Indian space sector is left unaddressed in the Space Policy.


While the Space Policy has made many allowances for NGEs, the government should also include provisions for a clear FDI policy with respect to the space sector in India. Currently, Indian space startups are receiving funding in the form of grants and prizes from foreign sources. Notably, startups such as Blue Sky Analytics5, have won international recognition and awards. Blue Sky Analytics is targeting to build the world's largest spatially and temporally continuous dataset on key environmental parameters and to transform the monitoring, diligence, and risk assessment systems globally. Further, a Bengaluru based startup6 engaged in the space data and the satellite imaging segment, successfully raised money from Google for its operations. Skyroot Aerospace,7 another space startup is developing India's first privately developed space launch vehicle and has secured $51 million from GIC Investments, Singapore for this endeavor. Clearly, Indian startups are a compelling opportunity for overseas investors, and the space sector in India Inc. does not need aggressive canvassing to generate international interest.

The FDI policy presently defers to the Department of Space to formulate guidelines that a space business must abide by to receive 100% FDI under the government approval route. Therefore, the Department of Space / ISRO should specify norms for an approval mechanism under the government approval route as well as under the automatic route. The Space Policy would have been the appropriate platform to formulate these guidelines, yet it remains silent. This is a lost opportunity to synchronize with the Indian Geospatial Policy, 2022, by not addressing any issue related to investments in this sector. Such a communication gap between inter-governmental ministries and departments will inevitably cause flight of business and capital to foreign shores.

Indian space entrepreneurs seldom receive the kind of material and monetary support foreign space startups have access to in the form of government grants and private funds. Industry experts observe8 that most space companies in India are no different from non-profits as they are often bootstrapped with founder capital. In contrast, in countries like the USA, for example, there are robust funding mechanisms and schemes through which organizations like NASA can directly fund American space startups. Given this inequity, the Government of India should facilitate FDI in the Indian startup space by enunciating clear rules in this regard, aligned with the objectives of the Space Policy.

The policy further does not address governance aspects which will go a long way towards increasing FDI in the space sector. The policy lacks a time frame for implementing the necessary steps, including the transition of ISRO's current practices and the creation of a regulatory framework by InSPACe. Clear rules and regulations are needed regarding foreign investment, licensing, government procurement to support new space startups, liability in case of violations, and an appellate framework for dispute settlement. InSPACe, as a regulatory body, currently lacks legislative authority, and functions under the Department of Space, leading to further ambiguity as to its position and function.

Foreign participation in the Indian space sector is subject to various national and international considerations. At the same time, Space Policy must be cognizant of the fact that the Indian private sector needs a range of inputs which can be addressed with the aid of foreign involvement, as investment, loans, or technology transfer. Some of the considerations from an Indian policy perspective include:

  1. Offsetting monopolization: The space sector is a capital-intensive industry, with the need for advanced technology, in both hardware and software, and the requirement of highly qualified personnel to develop, use and maintain such technology. This means that the threat of monopolies developing in this sector is exceedingly high, and likely to the detriment of domestic entrepreneurs and software developers who can be adversely affected by better funded foreign competitors. The prospect of large, non-Indian competitors, with dominant positions in space technology and know-how, are giving policymakers some cause for concern.9

    The threat of monopolization strikes at the intent of the Space Policy which is to develop an end-to-end product range within India for space projects. Hence, a clear FDI Policy becomes crucial to allow international agencies and investors who specialize in space-related enterprises to lend their expertise and invest in promising Indian space startups and businesses. Thereby creating a level playing field for domestic expertise to prosper with assistance from overseas capital and shared technology and know-how.

  2. Funding: To remain internationally competitive, India's space budget must rival those of its competitors, such as the USA and China. International competitiveness is also important from a national security perspective, such that India does not find itself left behind or exposed as the exploration, exploitation, and militarization of space increases. An FDI policy, which enables free flow of capital and technology (admittedly with such guardrails as India sees fit) for the development of Indian space enterprises while also preserving India's national security and mitigating cross-border threats will go a long way to ensuring that space technology is developed and used for the betterment of India and Indians.

  3. India's competitive advantage - leveraging India's success in space: India's success in space related projects is undisputed. The operational expenses associated with establishing a base and launching space vehicles in India are significantly lower when compared to organizations like NASA. With a demonstrated efficient and economic approach in its pursuit of space exploration, India presents a favorable cost-benefit outcome for overseas investors as a viable location for investment in space.

  4. Technological advancement: India has always fostered a scientific temper and risen to scientific challenges, for example, the production of low cost and more easily portable Covid 19 vaccines. Space technology should be no different. ISRO possesses a highly qualified workforce and advanced equipment and is currently working on launching the small satellite launch vehicle ("SSLV") in collaboration with private companies. This initiative will create expanded opportunities for international entities to establish partnerships with the Indian space sector, opening new avenues for collaboration.


Given the technical nature of space activities and the potential for the use of space technology in other areas of Indian industry such as financial services through quantum computing or satellite imagery for the real estate sector, it is reasonable to expect any policy regarding FDI in the space sector to have a nuanced and cautious position. The space sector consists of manufacturing hardware, software, safety equipment, human resource development, and iterative technology cycles. The government would be well advised to adopt an incremental approach and judge its comfort by allowing private entities to enter the space sector, which has traditionally been the preserve of the ISRO. This can be done by:

  1. Prescribing specific FDI limits (as necessary from an Indian policy perspective) for companies involved in satellite building/launching, providing goods and technology for space, and satellite capacity for telecommunications or broadcasting. Since these activities are licensed under the telecom sector where the FDI limit has been increased to 100% (from the previous 49%) through the automatic route vide press note 4 of 2021, it is expected that these companies should also be allowed 100% FDI through the automatic route.

  2. Amending the FDI policy to make accommodations for the public good, such as allowing 100% FDI in satellite data collection and dispensation for disaster prone and remote areas. Perhaps the biggest draw of space technology is its ability to reach and report information related to the most underserved and remote parts of the globe. This can be achieved by allowing satellite data collection, even by companies in which a foreign investor holds a majority stake, provided that the ownership and usage of such data may be regulated (perhaps in conjunction with the guidelines for acquiring and producing geospatial data and geospatial data services including maps, released by the Department of Science & Technology in 2021, which currently inhibits such data collection by foreign owned and controlled entities).

  3. Specifying in the Space Policy the adjudicating and licensing authority for various aspects of space activity related approvals in general and for FDI approvals in particular, the latter of which should fall into the purview of the Ministry of Commerce and Industry. This will help pre-empt issues related to regulatory conflicts that may arise between InSPACE and the Telecom Regulatory Authority of India (TRAI), for example, in the case of telecommunication related issues or InSPACE and the National Disaster Management Authority (NDMA) for disaster management related issues and information collection.

  4. Streamlining compliances and other procedural requirements, specifically in cases where a certain space activity, for example, activity related to communication or radio waves, cannot be permitted under the 100% automatic route. This step will also embrace the principle of 'ease of doing business' specifically in the hyper competitive arena of space technology.


We observe that the space policies of various jurisdictions reflect diverse approaches and priorities of each nation. While the USA encourages private sector involvement and innovation, the European Union emphasizes collaboration among member states. China focuses on self-reliance and technological advancements, while India emphasizes self-sufficiency and socio-economic development. Russia maintains its strong presence in space exploration, and Japan prioritizes scientific research and international cooperation.

These different approaches to space policy highlight the global significance of space activities and the recognition of its potential benefits. From scientific exploration to communication, satellite navigation, and earth observation, nations are leveraging space technology for various purposes. Collaboration and partnerships between countries have also become crucial for advancing space research and exploration.

As space becomes an increasingly crowded and competitive domain, it is essential for nations to establish clear policies that balance commercial interests, scientific research, national security, and international cooperation. The challenges and opportunities in space require a comprehensive framework that promotes innovation, addresses regulatory concerns, and encourages responsible space activities.

In the future, as space exploration continues to expand, it is expected that countries will further refine their policies to adapt to emerging technologies and address new challenges. By fostering collaboration, transparency, and mutual understanding, nations can collectively harness the potential of space for the benefit of humanity and the advancement of scientific knowledge. India's robust space program positions it as a leading player globally. FDI in the space sector will further enhance India's standing in the global space economy while also contributing to foreign exchange reserves of India and promoting technology transfer and research innovations.


1. 1962 address at Rice University, "Why we Choose to go to the Moon"

2. "end-to-end activities in space sector through establishment and operation of space objects, ground-based assets and related services, such as communication, remote sensing, navigation, etc. This would be subject to such guidelines/regulations as prescribed by IN-SPACe." Indian Space Policy – 2023, Page 6

3. "Opening up new opportunities in the Indian space sector", India Brand Equity Foundation, available at: https://www.ibef.org/blogs/opening-up-new-opportunities-in-the-indian-space-sector

4. "A ground view of the Indian Space Policy 2023", Rakesh Sood, The Hindu, May 11, 2023

5. "Blue Sky Analytics: A Bloomberg for Green Data", Forbes India, June 19, 2020, available at: https://www.forbesindia.com/article/work-in-progress/blue-sky-analytics-a-bloomberg-for-green-data/60211/1

6. "Alphabet Inc's Google leads $36 million funding round for Bengaluru-based space startup Pixxel", The Telegraph Online, June 04, 2023, available at: https://www.telegraphindia.com/business/alphabet-incs-google-leads-36-million-funding-round-for-bengaluru-based-space-startup-pixxel/cid/1942083

7. "In largest Indian space tech funding, Skyroot raises $51 million", Swati Bhardwaj, Time of India, Sep 02, 2022, available at https://timesofindia.indiatimes.com/business/india-business/in-largest-indian-spacetech-funding-skyroot-raises-51-million-from-singapores-gic/articleshow/93952505.cms

8. Dr. Susmita Mohanty, Co-Founder & CEO of Earth2Orbit's statement in Avneep Dhingra, 'What's Ailing Indian Space-Tech Starups', available at: https://www.geospatialworld.net/prime/special-features/whats-ailing-indian-space-tech-startups-2/

9. Peggy Hollingers, The coming of age of the global space economy, Financial Times, 14 June 2023, available at: https://www.ft.com/content/8cbcd55d-5a57-4617-aaa8

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