FDI in the Space Sector
Source: PIB
GS III: Effects of liberalization on the economy, changes in industrial policy and their effects on industrial growth
Overview
- News in Brief
- What is the proposed three-stage FDI for the space sector?
- What are the advantages of liberalised FDI for the space sector?
- How does the Indian Space Sector Perform?
Why in the News?
There is no 100 per cent blanket approval for Foreign Direct Investment (FDI) in the space sector.
News in Brief
- The process has been split into three stages to comply with military requirements, said industry veteran JD Patil, founder and chairperson of the Indian Space Association (ISpA). Patil is also a board member of the regulatory body Indian National Space Promotion & Authorisation Centre (IN-SPACe).
- The liberalisation process in the space domain was long overdue and should have happened two decades ago when the US did so to take early advantage.
- India will be able to achieve milestones faster, maybe in 10 to 15 years, due to innovation and an existing ecosystem due to the presence of the Indian Space Research Organisation (ISRO).
What is the proposed three-stage FDI for the space sector?
- There are three clear sorts of stages in the case of this FDI.
- Satellite operations were always available under 100 per cent FDI.
- For manufacturing and operating an entire satellite, up to 74 per cent, investment will be allowed under the automatic route.
- Anything beyond the limit will have to go through a government approval process.
- Under the current policy, foreign investment in manufacturing and operating satellites is allowed only with government approval.
- Launch vehicles and their systems and subsystems or the creation of a spaceport, up to 49 per cent FDI will be allowed through the automatic route under the new policy.
- The cap applies to the building of new spaceports in the country.
- At present, there is only one spaceport, the one operated by ISRO in Sriharikota.
- Regions from which investment can come would be the USA, Europe, Middle East and Southeast Asia.
| Sector/Activity | Sectoral Cap |
Entry Route |
| Satellites-Manufacturing & Operation: End-to-end manufacturing and supply of satellite and/or payload, establishing the satellite systems including control of in-orbit operations of the satellite & payloads. | 100% | Up to 74%: Automatic
Beyond 74%: Government route |
| Satellite Data Products: Reception, generation or dissemination of earth observation/remote sensing satellite data and data products including Application Interfaces (API). | ||
| Ground Segment: Supply of satellite transmit/receive earth stations including earth observation data receive station, gateway, teleports, satellite Telemetry, Tracking and Command (TTC) station, Satellite Control Centre (SCC), etc.
User Segment: Supply of user ground terminals for communicating with the satellite, which are not covered under the ground segment. |
||
| Launch Vehicles and associated systems or subsystems: A vehicle and its stages or components that is designed to operate in or place spacecraft with payloads or persons, in a suborbital trajectory, earth orbit or outer space. | 100% | Up to 49%: Automatic
Beyond 49%: Government route |
| Creation of Spaceports for launching and receiving Spacecraft: A spaceport (also referred to as launch site) can be regarded as the base from which spacecraft are launched, and consists of facilities involving devices for transportation to, from and via outer space. | ||
| Manufacturing of components and systems/ sub-systems for satellites, ground segment and user segment: Comprises the manufacturing and supply of the electrical, electronic and mechanical components systems/ subsystems for satellites, ground segment and user segment. | 100% | Up to 100%: Automatic
|
What are the advantages of liberalised FDI for the space sector?
- Currently, India’s space industry contributes approximately $7 billion to the national GDP and employs over 100,000 skilled professionals across various disciplines.
- With the implementation of liberalised FDI policies, experts predict a substantial uptick in these figures, with projections suggesting a potential GDP contribution of $50 billion by 2030 and the creation of over 500,000 new jobs in the space sector.
How does the Indian Space Sector Perform?
- India’s Space economy today stands at a modest $8 billion.
- A recent ADL (Arthur D Little) Report mentions that the Indian space sector has the potential of $100 Billion by 2040.
- Nearly 200 private Space Startups opened up in the sector.
- There has been an investment of over Rs.1,000 crore by private Space Startups in the current financial year from April to December 2023.
- Space Budget alone has seen a 142% increase in the last nine years.
- 424 foreign satellites launched by ISRO since the 1990s, more than 90% – 389 were launched in the last nine years.
- So far 174 Million US Dollars from the launching of the foreign satellites
- Out of these $174 million, as much as $157 million have been earned last nine years.
- Out of the European satellites launched so far in the last 30 years or more than that, the total revenue generated is 256 million Euros.
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