India spurs space sector investment with raised limits on foreign funding

India has updated official rules in the space sector to attract global investors and companies, after opening it up to private players four years ago. The new foreign direct investment (FDI) policy raises limits on foreign investment, potentially spurring renewed interest in the South Asian space community.

Private and public actors in India have been taking measures to increase participation in the country’s space sector. India’s space agency, the Indian Space Research Organisation (ISRO), has also made significant strides in the last few months to gain global attention, including the successful moon landing of its Chandrayaan-3 spacecraft and partnership with NASA over joining Artemis Accords. However, the restrictions in foreign direct investments limited the country’s scope to attract international investors and caused a delay in funding of some of India’s growing space tech startups.

On Wednesday, the Indian cabinet, led by Prime Minister Narendra Modi, approved an amendment in its FDI norms to allow increased overseas investment in the space sector, in some cases up to 100%. The Indian government has defined three different categories under the amended policy:

• Up to 49% (foreign ownership) for launch vehicles and associated systems and subsystems, creation of spaceports for launching and receiving spacecraft.
• Up to 74% for satellite manufacturing and operation, satellite data products and ground segment and user segment.
• Up to 100% for manufacturing components and systems and subsystems for satellites, ground segment and user segment.

Foreign investments beyond the given thresholds need government approval.

In June 2020, the Indian government passed its space sector reforms and founded a new agency, the Indian National Space Promotion and Authorization Center, to enable private companies to use ISRO resources and infrastructure.

Last year, the country also introduced its space policy to detail guidelines and rules for private participation. New Delhi additionally replaced its century-old rules with a new telecom act to enable the ground for global satellite-based broadband service providers, including Elon Musk’s Starlink.

India has around 190 space tech startups, offering such solutions as launch vehicles, space situational awareness and hyperspectral imagery. Investments in Indian space startups reached over $124 million last year, per government data. The country’s space economy is projected to reach $44 billion by 2033 (from $8.4 billion last year).

Industry body Indian Space Association, which counts space tech startups and private companies among its members, expects the updated FDI norms to help boost India’s presence in the global space economy from the existing merely over 2% share.