Director Ratan Shrivastava, wrote an update to clients on India’s recent moves to liberalize policies for foreign investment in the country’s growing space sector.

Context 

  • The Indian government on February 21 approved the new FDI policy for the space sector with the following permissible FDI limits, under an automatic route, divided into three sub-sectors: Up to 74 percent FDI for satellite manufacturing and operation, satellite data products and the ground and user segments. Up to 49 percent for launch vehicles and associated systems or subsystems and the creation of spaceports for launching and receiving spacecraft. Up to 100 percent for manufacturing components and systems/sub-systems for satellites and the ground and user segments.
  • India’s space industry currently contributes $7 billion to the national gross domestic product and aims to contribute $44 billion by 2033. India’s booming space economy has seen increasing interest by private industry, with the number of space start-ups increasing from one in 2014 to 189 in 2023, according to the government’s Start-Up India data.

Significance 

  • As a signatory to the Artemis Accord, a program co-led by the U.S. National Aeronautics and Space Administration and the U.S. Department of State, India will be able to foster greater partnership with U.S. aerospace and space firms, and with 23 other member nations. South Korea, Singapore and UAE have evinced interest in signing up for space cooperation with India.
  • The larger space eco-system comprising micro-, small and medium-sized enterprises is based in second, third and fourth tier cities in such states as Gujarat, Karnataka, Tamil Nadu and Telangana, which also helps the government distribute benefits of economic concentration to rural areas. The policy will also stimulate upgrading of the skills ecosystem in India, particularly in small and medium enterprises. In-SPACe, in collaboration with ISRO, has been mandated to support private entities with various skills upgrading programs.

Implications 

  • The new FDI policy will enable foreign investment and technology transfer in small and medium-sized enterprises, paving the way for a mature space industry eco-system cultivated by the India Space Research Organization (ISRO). Capital intensive sub-sectors such as launch vehicles and spaceports can benefit from the policy by accessing technology transfer from foreign companies, through joint ventures under the automatic route up to 49 percent, beyond which they can seek government approvals. Companies can now, with foreign investors or foreign partners, aim for a bigger role in the commercial space segment.
  • Indian companies, dominated by micro-, small and medium-sized enterprises, have proven capabilities in frugal space engineering and the new FDI policy will help them work with cutting-edge space technology and get inducted into the global supply chains of Western space companies. This will also help Indian companies access the latest, world-class space expertise and the Western companies leverage Indian cost-effective development and manufacturing of space technology, both in space exploration and space tourism segments. Foreign investors, particularly venture capitalists and funding houses, will see this as an attractive investment opportunity.​​​​​​​​​​

We will continue to keep you updated on developments in India as they occur. If you have any comments or questions, please contact BGA India Managing Director Ratan Shrivastava at india@bowergroupasia.com.

Best regards, 

BGA India Team

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Managing Director

Ratan is a senior executive and management consulting professional who has a proven track record in government, consulting and industry across India and Southeast Asia, with a wide network across stakeholders. He has been instrumental in developing and implementing growth strategies for both the public and private sector and has led diverse teams to secure new market opportunities. Prior to joining BGA, Ratan was at KPMG India where he helped the integration of the small and medium industry clusters, with the domestic and global aerospace, defense and space supply chains. He also served as an advisor at the Federation of ... Read More