From Ground to Orbit: India’s FDI Reforms in the Space Sector

On March 05, 2024, the Government of India reviewed the Foreign Direct Investment (FDI) Policy on the Space sector and made amendments under Para 5.2.12 of the Consolidated FDI Policy Circular of 2020:

Industry Prospects

In 2020, the space industry in India was estimated to be worth $9.6 billion, making up 2% to 3% of the global space economy. The industry is projected to grow to a value of $13 billion by 2025, and by 2030, India aims to take a bigger chunk of the world economy—nearly 10%—into its own hands. Over 400 industrial companies, including major Indian conglomerates and SMEs, are currently involved in the sector. ISRO is leading the effort to build subsystems for space launch and base infrastructure.

From just one start-up in the space sector in 2012 to 189 start-ups in 2023, Indian start-ups are actively participating in the market. The total amount of capital obtained by these startups increased from $67.2 million in 2021 to $124.7 million in 2023.

Growth Drivers of the Space Sector

• Demand for Satellite Services: The need for space-based services has increased due to recent advancements in satellite communication and other application areas, such as geospatial data-based services. As a result, more companies are required to enter the upstream and downstream space sectors in order to provide commercial offerings.
• Encouraging Private Players: The Private players can participate in setting up of ground stations for space crafts, which constitutes 48% of the space sector budget. They can also venture into applications of space technology, which contributes 45% of the space economy. Also, small satellite segments and component manufacturing are predicted to be emerging sectors for private participation.
• Emerging Areas in the Global Sector: The industry is expected to grow significantly in the future thanks to potential in intriguing fields like space tourism and the commercial recovery of space resources.
• Complementary Aviation and Defence Sector: India is one of the top nations in the world for defence procurement and allied production, and Bengaluru is among the top three aerospace and defence hubs in the world for drawing in foreign investment.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.