For some years, there has been a systematic effort towards evolving India’s private space sector. At present, apart from the Indian Space Research Organisation (ISRO), there are two more agencies, that are known to be responsible for carrying forward the business agenda of the Department of Space (DoS) and they are NewSpace India Limited (NSIL) and the Indian National Space Promotion and Authorisation Centre (IN-SPACe).
In addition, Hindustan Aeronautics Limited (HAL) and several industrial stakeholders including startups could be viewed as a part of India’s space setup.
In 2023, the Indian Space Policy was announced, which educates the roles of all these three organizations. It could be viewed as India’s ‘statement’ towards expanding its space sector and enhancing capabilities through increased private involvement.
Establishing Commercial Presence
Today, India wants to establish its commercial presence in various space-connected sections from component development to satellite manufacturing and launching. Also, there is a keenness to get involved in the services and ground station development sectors.
However, all these good intentions were required to be supported by sound financial logic. On Feb 21, 2024, the government of India approved the amendment in the Foreign Direct Investment (FDI) policy on the space sector.
Now under the amended FDI policy, 100% FDI is allowed in the space sector. This change was much awaited. Now with these liberalized entry routes under the amended FDI policy much is expected from the point of view of foreign investments in Indian space companies.
As per the details made available by the government in regards to the entry route, it is important to realize that 100% investment is possible only in the sectors associated with the manufacturing of components and systems/ sub-systems for satellites, ground segments, and user segments.
While 74% FDI under automatic route exists for satellite-manufacturing & operation, satellite data products and ground segments. In regards to launch vehicles and associated systems, the creation of spaceports for satellite launching and receiving spacecraft, there are many restrictions and only 49% FDI is permitted under the automatic route.
This recent policy change needs to be viewed in the backdrop of the assertion made by the Indian Prime Minister in August 2023, while addressing the scientists of ISRO that India’s space industry is expected to grow from $8 billion to $16 billion in the coming years.
The issue is, would we be able to double the business by only allowing 100% FDI in sectors associated with components & systems manufacturing for satellites and ground segments? Which are the main sectors of the space industry from which the business is going to come? Satellite Launch sectors carry much glamour, but need not be a big money spilling sector.
Ever-Widening Prospects
It is important to realize that the future market is not going to be limited to only some specific sectors. From satellite manufacturing to offering launch facilities to the services sector, the market is expanding rapidly.
Owing to increasing space debris problems and coast issues technologies like launcher recoverability (to recover back the lower stages of the rocket during launch for possible reuse) are gaining prominence. The market for the manufacture and launch of small satellites is increasing.
ISRO already has a proven system for launching small satellites called Small Satellite Launch Vehicle (SSLV) and they are expected to share this technology with the Indian industry.
Also, there is great potential within the Indian industry and some of them are expected to offer a launch facility in the near future. In the coming future, after the operationalization of its Gaganyaan program, India should be able to exploit this technology for commercial purposes too.
So, would 49% FDI in sectors like launch vehicles, and construction of spaceports for satellite launching and receiving spacecraft, would help the industry in a big way? There is a possibility that owing to the strategic considerations some specific decisions could have been taken.
All in all, it is expected that these FDI policy reforms will bring more investment, help in the creation of a good ecosystem for manufacturing facilities, and generate more employment.
In the future, based on some years of experience about the impact of these new policy guidelines the government could think of a 2.0 version of this policy.
Disclaimer: Views Expressed are Author's Own. Geospatial World May or May Not Endorse it
