On February 21, 2024, the Union Cabinet made a historic stride by sanctioning a groundbreaking revision to India’s Foreign Direct Investment Policy (“FDI Policy“) in the space sector. This pivotal decision marks a significant departure from India’s traditional stance, signaling a bold shift towards leveraging private investment and expertise to drive the nation’s space aspirations forward.

• The past few years have been significant for the growth of India’s private space sector. With the Government’s decadal vision for the growth of the space economy to $44 billion by 2033, progressive policies are empowering private companies to fuel growth.

Reforms in Space Sector:

• India’s space domain, historically governed by stringent government control, saw some reform initiatives in 2020, aimed at fostering private sector involvement. 
• However, these endeavors were confined to the government approval pathway, constraining the inflow of foreign investments into the sector. 
• Even the proposed 2017 draft of the Space Activities Bill, designed to encourage FDI and private sector engagement in commercial space ventures, maintained rigorous regulations, stifling investment opportunities.
• The recent revision to the FDI Policy is a welcome reform, opening avenues for FDI through the automatic route. This significant policy amendment is poised to revolutionize India’s space sector, paving the way for increased private sector participation and fostering innovation, competitiveness, and self-reliance in this vital sphere.
• The Indian Space Policy 2023 outlines a suggestive compilation of space undertakings permissible for private sector entities.
• The issue of new Geospatial guidelines in 2021 and National Geospatial Policy-2022, the New Space policy 2023 in April 2022 and the New Telecommunications Act 2023 have provided an enabling environment for growth in the Space Sector.

Need for attracting private sector participation in the space sector:

• Unleashing the true potential of space economy: Currently, India’s space economy is worth $8 billion. This is just 2 percent of the global space economy.
  • Boost India’s market share to $50 billion, or roughly 10%, by 2030,
• Space station: India intends to launch its own space station by 2035. Thus, it would require funding not only from government sector but private sector also.
• Strategic Goals: Space has become one of the dimensions of modern warfare. This requires optimal use of space and private sector participation can help in achieving this objective.
• Employment Generation: Promoting the private sector will enable the Indian space program to remain cost competitive within the global space market, and thus create several jobs in the space and other related sectors.
• Lower the burden on ISRO-Enhanced private sector participation would allow the Indian Space Research Organization to exclusively focus on research and development.
• Unlock the potential of India’s youth and entrepreneurs: The need to promote private sector activity in all high technology areas including space, to fully unlock the potential of India’s youth and entrepreneurs.

Steps taken by the government to enhance private sector participation in the space sector: 

• IN-SPACe: This was launched to provide a level playing field for private companies to use Indian space infrastructure.
• New Space India Limited (NSIL): Its aim is to use research and development carried out by ISRO over the years for commercial purposes through Indian industry partners.
  • First private launch pad & mission control centre established in ISRO campus. 
• Indian Space Association (ISpA): It aims to open the Indian space industry to private companies and startups. For ex- around 190 startups are working in this area.
• Liberalized FDI regime: The government has allowed following fields under automatic route-
  • Firms in satellite manufacturing and operation, satellite data products and ground segment, and user segment can get FDI up to 74 %.
  • For manufacturing components and systems/subsystems for satellites,100 % FDI is allowed.