India in the space race: What’s working in our favour?

From exploring the far side of the moon to launching its maiden mission to the sun, Indians all over the world have been thrilled to read about the country’s space ecosystem. We have achieved remarkable milestones lately, with the Indian Space Research Organisation (ISRO) at the forefront driving this progress. The successful test flight of the Agnibaan launch vehicle in May 2024 by an Indian space start-up—powered by the world’s first 3D-printed rocket engine—was a further testament to our rise in space tech.

India’s space economy—which was at USD5 billion in 2020¹ — is currently worth USD8 billion² and is set to grow at a compound annual growth rate (CAGR) of 6 per cent to reach USD13 billion by 2025.³ What is behind this progress that has the world appreciating India’s efforts? Here’s my take.

A. The start-up environment

India’s space start-up ecosystem is on a growth trajectory, driven by strategic government reforms, rising entrepreneurial interest and ISRO’s nurturing initiatives. For instance, during the Agnibaan mission, ISRO supported in site selection, launchpad and seamless network establishment. Space start-ups have gone up from just 1 in 2014 to over 200 today⁴, attracting investments worth INR1,000 crore in 2023 alone.⁵These companies are developing capabilities in designing and manufacturing satellites, launch vehicles, ground stations, satellite subsystems and other emerging technologies.

B. Targeted measures

The Government of India has taken several strategic initiatives to incentivise private sector participation by creating a more connected ecosystem where companies benefit from ISRO’s resources. For instance, the launch of IN-SPACe is helping private players take advantage of ISRO’s assets, such as testing centres, launch sites and launch vehicles. IN-SPACe also helps start-ups through their initial stages and promotes research and development (R&D) activities. Further, recent policies—such as the National Geospatial Policy and the Indian Space Policy—are providing a holistic framework.

C. Investments are being strategically scaled-up

To further strengthen the private sector, the Indian government amended its foreign direct investment (FDI) policy in February, allowing up to 74 per cent FDI in satellite manufacturing and operation, 49 per cent FDI for launch vehicles, spaceports and associated systems and 100 per cent FDI to manufacture components and systems/sub-systems for satellites, ground and user segments.⁶ This will help the country in enhancing its expertise in emerging technologies, boosting its global commercial presence, fostering a conducive R&D environment and creating high-tech employment opportunities.

Going ahead, as India aims to have a USD44 billion space economy by 2033,⁷ we must continue building a collaborative ecosystem by enabling a seamless flow of investments, technology and resources.

^[1] India’s Space Economy Valued at INR36,794 crore, The Hindu, 27 March 2022, accessed on 24 June 2024
^[2] How India's Space Economy could Hit USD100 billion by 2040, Forbes India, 26 July 2023, accessed on 24 June 2024
^[3] India's Space Economy to be Worth Nearly USD13 Billion By 2025, Says Indian Space Association: Report, India Times, 11 October 2022, accessed on 24 June 2024
^[4] Press Release, Department of Space, 20 December 2023, accessed on 24 June 2024
^[5] India’s Space Start-ups Attracted Private Investments Worth INR1,000 Cr: Minister, Hindustan Times, 13 December 2023, accessed on 24 June 2024
^[6] FDI Boost. Finance Ministry Notifies New FDI Limits for Satellite-related Activities under FEMA, The Hindu Businessline, 17 April 2024, accessed on 24 June 2024
^[7] India's Goal is to Have USD44 Billion Space Economy by 2033: IN-SPACe Chief, IBEF, 3 June 2024, accessed on 24 June 2024