MC Exclusive | Space tech industry pitches for 74% FDI in line with defence sector

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Stakeholders are pitching for a 74 percent foreign direct investment (FDI) in the space tech industry as the government deliberates on the policy, according to sources.

This was proposed in a meeting the Department of Space held last month with various stakeholders.

“This proposed 74 percent would be in line with the FDI for the defence sector which was increased from 49 percent to 74 percent,” a source with knowledge of the matter said, adding that most attendees at the meeting were aligned to this view.

The Indian National Space Promotion and Authorisation Centre (In-Space), which was launched by the government recently to promote space activities of private players, declined to comment on the matter as the ‘policy is right now under consultation’.

Moneycontrol also reached out to the Department of Space with queries regarding the matter. The article will be updated when a response is received.

“If India’s space tech industry wants to compete with global companies then it needs access to global capital,” a source said.

Earlier in the month, Hyderabad-based space tech startup Skyroot Aerospace raised $51 million (Rs 403 crore) in a Series-B financing round led by Singapore-headquartered GIC.

Similarly, last month, Dublin-headquartered IT consulting firm Accenture announced it has invested in Bengaluru-based space-tech startup Pixxel which is building the world’s highest resolution hyperspectral imaging constellation of satellites.

Explaining how FDI would help the space industry in India, Lt Gen AK Bhatt, director general of Indian Space Association said, "Liberal FDI in space would help the nascent space industry to grow as it would infuse more capital from international players."

"In an industry like space with long gestation period and high risk with return on investments taking long time, any capital infusion from external players would be welcome. This is also being encouraged by the government in multiple sectors," Bhatt told Moneycontrol in a statement.

Nakul Batra, associate partner at DSK Legal, explained that under the current FDI regime, only establishment and operation of satellites is envisaged as part of the space sector.

"Thus, 100 percent FDI under the government route is permitted for establishment and operation of satellites," Batra said. “This means that for any private sector participation by way of FDI for establishing and operating satellites, it would require prior approval of the government.”

However, in February, Union minister of State for Science and Technology Jitendra Singh said that the government is planning to allow FDI in the space sector to boost investment in the industry.

“Undoubtedly the availability of large capital and access to cutting-edge technology in the form of FDI (considering the sensitivity and strategic importance) similar to the relaxation in FDI in the defence sector, will likely catalyse rapid development and expansion of the Indian space infrastructure,” Batra said.