On February 21, 2024, the Union Cabinet made a historic stride by sanctioning a groundbreaking revision to India's Foreign Direct Investment Policy ("FDI Policy") in the space sector. This pivotal decision marks a significant departure from India's traditional stance, signaling a bold shift towards leveraging private investment and expertise to drive the nation's space aspirations forward.

India's space domain, historically governed by stringent government control, saw some reform initiatives in 2020, aimed at fostering private sector involvement. However, these endeavors were confined to the government approval pathway, constraining the inflow of foreign investments into the sector. Even the proposed 2017 draft of the Space Activities Bill, designed to encourage FDI and private sector engagement in commercial space ventures, maintained rigorous regulations, stifling investment opportunities.

Against this backdrop, the recent revision to the FDI Policy is a welcome reform, opening avenues for FDI through the automatic route. This significant policy amendment is poised to revolutionize India's space sector, paving the way for increased private sector participation and fostering innovation, competitiveness, and self-reliance in this vital sphere.

Under the revised policy framework, the satellites sector has been delineated into three distinct activities, each with specified limits for foreign investment. This strategic move aims to provide clarity and investment opportunities, while catalyzing growth and innovation in the space sector. Additionally, the Indian Space Policy 2023, a dynamic and comprehensive framework, serves as a guiding compass for unlocking India's space potential through enhanced private participation. The Indian Space Policy 2023 outlines a suggestive compilation of space undertakings permissible for private sector entities. These activities encompass a range of functions such as acquiring, leasing, or setting up communication satellites; managing and operating remote sensing satellite systems; overseeing ground facilities dedicated to space operations; utilizing Indian or non-Indian orbital resources for establishing space objects catering to communication services; and making International Telecommunication Union submissions through bodies like Wireless Planning Commission, Department of Telecommunications, or non-Indian administrations for procuring orbital resources, among others. Set forth below is a brief summary of functions assigned to different authorities under the Indian Space Policy, 2023:

Previously, FDI in satellite establishment and operation was confined to the government approval route. However, in line with the objectives outlined in the Indian Space Policy 2023, the revised FDI policy now presents a more liberalized entry route and clearer investment guidelines for satellites, launch vehicles, and associated systems.

1. Indian National Space Promotion and Authorization Centre:

  1. Functions as a centralized clearance and authorization agency for space endeavors.
  2. Shares technological insights, practices, and processes with non-government entities ("NGEs").
  3. Establishes a uniform regulatory framework for NGEs.
  4. Plays a dual role as a promoter and regulator, fostering industry clusters and issuing liability guidelines.

2. New Space India Limited:

  1. Specializes in commercializing space technologies and platforms developed through public investment.
  2. Oversees the manufacturing, leasing, or procurement of space components, technologies, and platforms.

3. Department of Space:

  1. Offers comprehensive policy guidelines and implements space technologies.
  2. Facilitates international cooperation in space governance.

4. Indian Space Research Organisation:

Concentrates on Research and Development ("R&D"), transferring mature systems to industries for commercial utilization.

5. Non-Governmental Entities' ("NGEs") Role:

Authorized to engage in end-to-end activities in the space sector.

Previously, FDI in satellite establishment and operation was confined to the government approval route. However, in line with the objectives outlined in the Indian Space Policy 2023, the revised FDI policy now presents a more liberalized entry route and clearer investment guidelines for satellites, launch vehicles, and associated systems.

Key Highlights of the Revised FDI Policy

  1. Policy Clarity: The revisions to the FDI Policy offer liberalized entry routes and clarity for FDI across various sectors within the space industry.
  2. Categorization and Liberalisation of FDI: The amendment provides for three categories of liberalised entry route.
Sr. No. Sector / Activity % of Equity / FDI Cap and Entry Route
(i) Launch vehicles and associated systems or subsystems, creation of spaceports for launching and receiving spacecraft. Up to 49% under the automatic route

(Investments beyond 49% will require prior approval of the relevant sectoral regulator under the government route.)
(ii) Satellite manufacturing and operation, Satellite data products, and ground segment and user segment. Up to 74% under the automatic route

(Investments beyond 74% will require prior approval of the relevant sectoral regulator under the government route.)
(iii) Manufacturing of components and systems/sub-systems for satellites and ground segment and user segment. Up to 100% under the automatic route


This strategic move is poised to unlock a plethora of benefits for India's space sector. Enhanced private sector participation is anticipated to not only generate employment opportunities but also facilitate the absorption of modern technology, fostering sectoral self-reliance. Furthermore, it presents an opportunity for Indian entities to seamlessly integrate into global value chains, bolstering initiatives such as Make in India and Atmanirbhar Bharat.

In conclusion, India's decision to liberalize the FDI Policy within the space sector underscores its commitment to fostering innovation, competitiveness, and self-reliance in this critical domain. By embracing private participation and fostering an enabling investment environment, India is primed to unlock new opportunities, propel technological advancements, and emerge as a pivotal player in the global space economy.

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