ARTICLE
12 April 2024

Space Sector And FDI In India

SR
S.S. Rana & Co. Advocates

Contributor

S.S. Rana & Co. is a Full-Service Law Firm with an emphasis on IPR, having its corporate office in New Delhi and branch offices in Mumbai, Bangalore, Chennai, Chandigarh, and Kolkata. The Firm is dedicated to its vision of proactively assisting its Fortune 500 clients worldwide as well as grassroot innovators, with highest quality legal services.
In the last decade India has become a forerunner in not only cost efficient and innovative space faring endeavors...
India Government, Public Sector
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In the last decade India has become a forerunner in not only cost efficient and innovative space faring endeavors, but has also provided a fitting regulatory environment for growing of space tech startups like Astrogate Labs, Bellatrix Aerospace etc. Now to boost India's space tech story into the stratosphere, the government on February 21, 2024 liberalized the FDI policy for the space sector. This article delves into India's current space sector, examining the recent FDI policy amendment, its necessity and impact on the industry and what the future holds for Indian Space Sector.

FDI Amendment: 100% FDI in the Space sector

The FDI policy amendment marks a pivotal shift in India's approach to the space sector, dividing the satellite sub-sector into distinct activities with defined limits for foreign investment.1 Earlier investment in the Space sector was only possible through the government - approved route. With the introduction of the new FDI policy, it has bought along the ease of doing business and encouraging investment through liberalization of the sector.

By allowing 100% FDI in the Space sector, the government has opened a portal of investment opportunities for private and public investors through liberalized routes:

  • Up to seventy-four percent (74%) under automatic route: Satellite-manufacturing and operation, satellite data products and ground segment and user segment. Beyond the limit of seventy-four percent (74%) these activities are under government route.2
  • Up to forty-nine percent (49%) under automatic route: Launch vehicles and associated systems or sub-systems, creation of spaceports for launching and receiving spacecrafts. Beyond the limit of forty-nine percent (49%), these activities are under government route.3
  • Up to hundred percent (100%) under automatic route: Manufacturing of components and systems/sub-systems for satellites, ground segment and user segment. This increased private sector participation is expected to generate employment, facilitate technology absorption, and foster self-reliance, integrating Indian companies into global value chains.4

By collaborating with international players, India aims to contribute significantly to the scientific advancements while also bolstering its standing in the International Space sector.

Benefits of the FDI amendment

The introduction of these three routes through 100% FDI in the Space Sector promises to unlock a plethora of benefits for the budding private space industry

  • More expertise, investment and technology inflow into the Indian Space Industry.
  • Better Value chain addition.
  • Ease of doing business for domestic as well as foreign players.
  • Fillip to infrastructure development and ancillary industries.
  • Increase in India's share in the global space sector from USD $8.4 billion to USD $47.3 billion by 2032.5
  • Ability to compete with Sector Leader like USA, Russia and the EU.
  • Indian Startups, like pixxel, Skyroot Aerospace, AgniKul Cosmos etc through this amendment, would be able access a broader pool of funding.

Conclusion

The decision to permit 100% FDI in the space sector is a watershed moment which holds the potential to allow the nation to reach new heights in space exploration and technology. Liberalization of investment, Signing of Artemis Accords6 and Indian Space policy 2023 has created a trifecta of opportunities for the sector, landing India's space story in a goldilocks zone of opportunities. with increasing interest of all stake holders in India's space sector, it is now time for the government to ponder over the need for a codified space law, to provide reassurance and protection to the domestic as well as the foreign investing entities.7

Ritwik Maini, Intern at S.S. Rana & Co. has assisted in the research of this Article.

Footnotes

1 https://timesofindia.indiatimes.com/india/govt-eases-fdi-norms-in-space-allows-100-foreign-investment-for-making-sat-components/articleshow/107892575.cms

2 https://pib.gov.in/PressReleaseIframePage.aspx?PRID=2007876

3 https://pib.gov.in/PressReleaseIframePage.aspx?PRID=2007876

4 https://pib.gov.in/PressReleaseIframePage.aspx?PRID=2007876

5 https://ssrana.in/articles/need-comprehensive-space-law-india/

6 https://www.barandbench.com/law-firms/view-point/indias-strategic-move-signing-the-artemis-accords-propels-space-exploration-ambitions-beyond-the-moon-agreement

7 https://ssrana.in/articles/need-comprehensive-space-law-india/

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ARTICLE
12 April 2024

Space Sector And FDI In India

India Government, Public Sector

Contributor

S.S. Rana & Co. is a Full-Service Law Firm with an emphasis on IPR, having its corporate office in New Delhi and branch offices in Mumbai, Bangalore, Chennai, Chandigarh, and Kolkata. The Firm is dedicated to its vision of proactively assisting its Fortune 500 clients worldwide as well as grassroot innovators, with highest quality legal services.
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