It is a fact that the Indian space sector, valued at $9.6 billion in 2020, contributes only about 2% of the global space economy of about $470 billion. It is targeted for the sector to reach $13 billion by 2025 and, further, aim by 2030 to capture about 10% of the global space economy i.e., a four to five-fold growth in 5 to 6 years. However, the target is also moving and experts opine that the global space economy could well be $1 trillion in the next few years.
In fact, as stated by Ajay Kumar Sood, Principal Scientific Advisor, “In 2022, the space sector is witnessing what the Information Technology Sector experienced in the 1990s. We will have our own Space X in the next 2 years”, he said. The sector is, in fact, bubbling with much enthusiasm. There are over 150 space startups and more proposals are under process with IN-SPACe who is working overtime for the facilitation and encouragement of the sector.
The formidable task of seeking an inflow of over $40 to $50 billion by 2030 and helping enthusiastic space startups to grow expeditiously, then much has to be done to actively facilitate funding of the sector. The Government is doing a lot in this area to help and incentivize but the ground reality is still that the availability of domestic funds is limited and also significantly more expensive as compared to funds abroad. This underscores the need to have a facilitating FDI policy to help bring in adequate foreign funds in a timely manner to supplement the domestic funds and improve India’s position in the global arena.
Source – SpaceTech Global
After considerable consultations, a great new Space Policy was announced a few days ago which seeks to significantly synergize the skills and talents of the public and private sectors to catapult India to a position of global leadership in the space sector. Having completed this landmark policy, it is expected that the Government would shortly release a suitable FDI Policy to help achieve the goals.
Given the need for accelerating growth in this sector, an FDI Policy featuring the following features would be essential to achieve the stiff targets before us:
- The FDI limit for space activities in India should be segregated. Companies looking to build/launch satellites, provide goods and technology intended for use in space and companies looking to build satellite capacity (for telecommunications or broadcasting) over India, provide tracking & telemetry services could be subject to different FDI limits. Considering that the latter are licensed under the telecom laws and the FDI limit in the telecommunication sector has been enhanced to 100% (from earlier 49%) through the automatic route, these companies should be subject to a 100% FDI through automatic route.
- Though preferable, if 100% FDI via automatic route is not an option, the government should allow 100% FDI through a streamlined process that has eased requirements. The new process must necessarily be time bound and transparent with predictable approvals.
- It would be appreciated that affordable and ubiquitous broadband for remote and difficult-to-reach locations in India, would only be possible through modern satellite technologies which may not be available in India for few more years. Hence, in the short to medium term, we need the support of foreign operators and their satellite/constellations to bring down the cost of satellite capacity and make satellite broadband more affordable here. To enable this, the foreign operators might need to establish India entities only to land signals from their satellites/constellations and hence will not be able to bring in FDI in the short to medium term. Nevertheless, in such cases, it is preferable for such companies to establish Indian entities for the sake of accountability. In order to encourage the same, FDI restrictions applicable to the space sector should not apply to them. The existing restrictions could be left in place for applicants of any country, sharing a land border with India, as per existing FDI policies. Differential rules could also apply between FDI from ‘trusted’ sources and other sources.
- Having a 100% FDI option specifically for satellite communications through the automatic route (as done in telecom) will encourage foreign investments in the area of satellite connectivity.
India’s National Digital Communications Policy envisages better connectivity and access to technology for a Digital India. Space based communication such as satellite broadband connectivity will contribute significantly to this vision. Therefore, the government should ideally allow 100% FDI under automatic approvals based on learning from the telecom sector.
By pumping in the required large FDI into the space sector, there would not only be great growth benefits in the sector but also other important trickle-down effects since space sector is a key enabler of growth in many other sectors like Meteorology, Energy, Telecommunications, Insurance, Transport, Maritime, Aviation and Urban Development. Given our innate strengths in space technology, R&D and administration, the future is indeed bright with the right FDI Policy as the companion policy for the new and progressive space com policy. It is expected there would be meticulous implementation of the new Space Policy, in letter and spirit, so that the space sector takes off smoothly and attains the highest orbits of excellence.
The author is President of Broadband India Forum
