New FDI Regime Rocket Fuel For The Spacetech Sector

While the new policy doesn’t allow 100% FDI flow via automatic route for all the subsegments, industry leaders think it’s an important first step towards the liberalisation of the Indian space sector.

Easier access to capital will also allow new and existing Indian space tech companies to scale up

It is pertinent to note that the government earlier also allowed 100% FDI for the establishment and operations of satellites but it was subject to the government’s approval.

The Indian government has fulfilled a long-standing demand of spacetech startups by liberalising the FDI regime for the sector, allowing up to 100% FDI via the automatic route for certain sub-segments in the space sector.

The move is part of the government’s push to make India a leading player in the segment by enabling the growth of private players.

While the Centre opened up the space industry to private players in 2020 and subsequently established the Indian National Space Promotion and Authorization Centre (IN-SPACe), as a nodal agency, to support emerging startups in the sector, the lack of a clear FDI policy for the space sector was a major bottleneck.

It is pertinent to note that the government allowed 100% FDI for the establishment and operations of satellites in 2020. Still, it was subject to the sectoral guidelines of the Department of Space or the Indian Space Research Organisation (ISRO).

Spacetech being a capital-intensive sector, particularly in the upstream market, has always depended on foreign capital. However, the startups had to apply to the government to receive any foreign financial aid so far.