Foreign Direct Investment in Indian space sector

Till now, the Indian Space Research Organisation (ISRO) had been spearheading the Indian space sector and the private sector involvement in space sector was primarily through the supply chain of ISRO

With the introduction of ‘Indian Space Policy-2023’ in April last year, the Government of India indicated its intention of enhanced private participation in the sector. It re-defined the role and responsibilities of several players in the sector, with ISRO's focus defined to research and development, and setting up of In-Space, to promote and authorise space activities in India. Till date, In-Space has already approved more than 250 applications for space projects (including applications from private sector participants)

In a recent press release by the Ministry of Commerce and Industry, the applicable limit on Foreign Direct Investment (FDI) in the space sector was reviewed. Under the revised policy, the Union Cabinet has proposed to ease the FDI policy on space sector by prescribing liberalised FDI thresholds for various activities in this domain.

Proposed impact on private participation

India became the first country to land near the moon’s South Pole, and the fourth country to soft land on the moon. With India’s successful involvement in various space missions and the planned human space flight mission to the moon (‘Gaganyaan’), the Indian space sector has grabbed the attention of its own government and has put India’s capabilities in space technology in the global spotlight
The Indian government intends to make the policy landscape more conducive to private participation while keeping the national security at the centerstage
With the introduction of the new space policy in 2023 and space funding in the recent interim budget 2024 of INR 13,043 crore (~USD1.57 Bn), the government is attempting to take the Indian space sector to its inflection point
Relaxation of FDI norms and laying the groundwork for foreign participation is a positive move and is expected to make the sector, more attractive in the eyes of the foreign investors.
The easing of FDI norms will enable Indian space startups working on capital-intensive space products access to the global pool of capital which in turn, will help them to expand manufacturing and production capacity