India's space industry over the moon after Centre eases FDI norms

Move will attract investments worth $5 billion in five years, say industry experts

India’s space industry on Thursday welcomed the Union Cabinet’s decision to liberalise the sector, asserting the move would attract investments to the tune of up to $5 billion across sub-sectors like satellite manufacturing, launch vehicles, ground segment solutions, and associated services over the next five years, industry experts said.

The policy cleared by the Union Cabinet ensures 100 per cent FDI in the manufacturing of components and systems or sub-systems for satellites, ground segments, and user segments.

On the other hand, 74 per cent FDI has been permitted for satellite manufacturing and operation, satellite data products, and ground segments and user segments.

Beyond 74 per cent, these activities fall under the government route.

In addition, for the development of launch vehicles and associated systems, and the creation of spaceports for launching and receiving spacecraft, FDI under the automatic route has been fixed at 49 per cent.

According to the companies involved in the Indian space sector, the move could also open the doors for the launch of vehicle businesses such as SpaceX, Virgin Galactic, Starlink, Amazon: Blue Origin, Airbus Defence and Space, RocketLab, Maxar Technologies, and Eutelsat-OneWeb, among others who are keen to tap into the cost-effective nature of the Indian market.

“The new FDI policy is expected to attract significant inflows in the next 2-5 years. We project the allowing of higher FDI levels and overseas capital participation to catalyse over $4-5 billion into India’s space industry across sub-sectors like satellite manufacturing, launch vehicles, ground segment solutions, and associated services over the next three to five years,” said AK Bhatt, Director-General, Indian Space Association (ISpA).

According to IN-SPACe (the Indian National Space Promotion and Authorisation Centre), the commercial arm of ISRO that handholds startups, the Indian space economy is likely to grow from around $8.4 billion currently to $44 billion by 2033.

“This will boost investments in this sector. The 49 per cent fixed for launch vehicles is going to be investment heavy among all the decisions. It is going to bring large global players to India. This includes spaceports as well.  We expect this 49 per cent to further get extended,” said Pawan Kumar Chandana, co-founder of Skyroot Aerospace, the start-up that developed Vikram-S, the first privately developed rocket launched in 2023.

“It will simplify the process, enhance the ease of doing business, scale up existing companies, and attract the right set of global investors eager to engage with India's dynamic space sector. By facilitating job creation, encouraging domestic innovation, enabling technology transfer, and fostering integration into the global value chain, these reforms will ensure that we’re well-positioned to become a formidable player in the global space economy,” said Awais Ahmed, founder and chief executive officer of Google-backed Pixxel.

The decision may also bring Indian companies access to the latest technological advances and funds not only from the country but from international investors as well.

“Global space economy is estimated at $546 billion, and India’s share is estimated to reach $44 billion in 10 years, which could entail investments to the tune of $20 billion,” an official from Speciale Invest said, an investment company with a portfolio that includes major Indian players like AgniKul, Galaxeye, and Astrogate.

Investors also see this as a boost for the ‘Aatmanirbhar Bharat’ initiative and collaborative approach with global majors.

“This move by the government is a boost to space startups, making the reality of India becoming a stronger space power in the coming years,” said Srinath Ravichandran, co-founder and chief executive officer of Agnikul Cosmos.