India Allows 100% FDI In Indian Space Sector: Need and Significance

Context:

This editorial is based on the news “The next frontier: On India’s space sector” which was published in the Hindu. With an aim to attract potential investors to Indian space companies, the Indian government recently allowed up to 100% investment through three categories of liberalised entry routes.

Rising Indian Space Sector

• High Worldwide Investment: A “significant” part of the $37.1 billion that the space sector raised worldwide in 2021-23 went to space start-ups. 
• Opportunities for India: New investments can add to India’s space economy by improving start-ups’ access to talent and capital.
  • Effecting a better balance between upstream and downstream opportunities.
• Boosting local manufacturing.
  • Improving investor confidence. 

Private Players Exploration in Indian Space Sector

• Change of Notion: The notion that space technologies and space flight are expensive, risky endeavours that only national agencies were suited to engage in for decades is no longer true.
• Entry by Private Sector: The private sector players are increasingly expected to complement, augment, and/or lead the way by identifying market opportunities and innovating rapidly. 
• India’s Actions: In 2020 with state-led reforms, India opened its space sector to private companies.
  • Released the ‘Geospatial Guidelines’ and later the ‘Indian Space Policy’.
  • Created the Indian National Space Promotion and Authorisation Centre (IN-SPACe).
  • Passed the Telecommunications Act 2023, provided for satellite broadband services. 
• Provision of FDI in space sector: Recently, the government opened the door to:
  • 100% foreign direct investments (FDI) in the “manufacturing of components and systems/sub-systems for satellites, ground segment and user segment”.
  • Up to 74% in satellite-manufacturing, operations and data products.
  • Up to 49% in launch vehicles, space ports, and their corresponding systems. 
• Significance of Such Action: The government has taken the logical next step:
  • In spurring the contributions of private space flight operators, technology-developers, and application designers to the national space economy.
  • In line with ambitions outlined in the Space Policy.
  • The decision gives India the ability to take advantage of its less vitiated foreign ties to catch up with China’s more advanced position as a space power. 
    • China’s ability to attract foreign investments is hamstrung by its belligerent foreign policies and its plan to modernise the military by, among other things, adapting civilian technologies for military use. 

Conclusion

India has taken considerable and appreciable steps to sustain the new change. Now, the government must keep the regulatory environment clear, reduce red tape, increase public support, and ease Indian companies’ ability to access foreign markets.

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