FDI in space sector is welcome

The decision to open up the space sector for higher foreign direct investment (FDI) is a welcome move and natural culmination of a policy that the government has recently followed.

The new policy allows 74 per cent FDI under the automatic route for satellite manufacturing/operations and satellite data products, 49 per cent for satellite launch vehicles, and up to 100 per cent for manufacturing of satellite sector components and sub-systems.

While it is a continuation of the policy reforms that allowed private companies a role in the space sector, it is also a departure from the entrenched government control over the sector.

The Indian Space Policy of 2023 had proposed to “enable, encourage and develop a flourishing commercial presence in space” and recognised the private sector as a critical stakeholder in the space economy.

A number of legislative measures have also been done to enable the implementation of the policy. InSPACEe (India National Space Promotion and Authorisation Centre) was also conceived as a single-window agency for clearance of proposals and endeavours. 

The new policy is expected to attract both capital and technology to the field, which is both capital intensive and technology-heavy. The aim of the policy reform is to attract all global players in the space sector, both big and small, like investors, space flight operators, technology-developers and application designers to the Indian space sector.

Launch vehicle operations and component manufacturing are set to gain as manufacturers will now be able to tap global capital to expand manufacturing and production capacity.

It has also been observed that the 49 per cent FDI for launch vehicles would reflect the need to balance foreign investment with national security as domestic entities would retain control and decision-making power while benefiting from foreign expertise, technology transfer and investment.

The opening up of the sector is in line with India’s aspiration to increase its share of the global space market five-fold from the current 2 per cent by 2032. The space economy is projected to reach $47.3 billion by then. The industry has welcomed the new norms and expects fresh investment of $25 billion in the next 10 years.

There is a view that the provision for 74 per cent via automatic route in sat-coms may not be enough to attract global capital into the area but the overall sentiment is optimistic.

The decision should not be seen as only a commercial proposition. It should help the country to become a technological power also in the sector which has strategic implications. India has ambitious plans and projects lined up before it in the coming years, and supportive and forward-looking policy will give a boost to the sector.