According to a top government official, there is currently inter-ministerial discussion about further easing restrictions on foreign direct investment in the space industry in order to draw foreign players and private businesses. According to the official, there is a ton of room for foreign businesses to invest in India’s rapidly expanding sector.
The proposal to ease foreign direct investment (FDI) norms in the space sector is “under inter-ministerial discussion,” the official added. However, the official did not disclose further details. Presently, FDI in the space sector is allowed up to 100 per cent in the area of satellite establishment and operations through government route only.
Three G-20 nations have shown interest in potential partnerships or collaborations with India in the space sector after the Chandrayaan-3 spacecraft of the Indian Space Research Organization touched down close to the South Pole of the moon. The Indian Space Policy 2023, which seeks to institutionalize private sector participation in the space sector with ISRO focusing on research and development of advanced space technologies, was approved by the government in April.
The roles and responsibilities of ISRO, space sector PSU NewSpace India Limited (NSIL), and Indian National Space Promotion and Authorization Center (IN-SPACe) were also outlined in the Indian Space Policy-2023. The global space economy is predicted to be worth approximately USD 546 billion in 2022 and USD 1 trillion by 2040, according to estimates from various reports. The growth, according to the reports, will be fueled by efforts to cut costs and the development of new technologies.
According to a Deloitte-CII report, the Indian space economy comprises a long value chain, starting with Research and Development (R&D) outfits and manufacturers of space hardware and ending with providers of space-enabled products and services to consumers that enable technology, business, and governance propositions.
As per the report, while the Indian government has started to provide tax impetus to the space sector, it needs to take more initiatives for tax exemptions/tax holidays/accelerated depreciation for companies directly or indirectly engaged in space sector activities, so that the benefits are available to the entire value chain and there is no embedded tax cost.
“Within the space industry, governments often serve as the initial customers for numerous startups, while also acting as stable clients for companies engaged in strategic space and national security initiatives. “To enhance investor interest in the space sector, space agencies are fostering capital inflow, with companies securing government contracts, offering a sense of assurance to potential investors,” the report has said. It has added that there is a need for creating sustainable market demand for the private startups, which in turn contributes to the establishment of a robust private space ecosystem in India.