Mapping India’s space-tech industry and regulatory landscape: A launchpad for innovation & growth

By Garima Mitra, Co-Founder, Treelife

In recent years, the space-tech industry has gained much traction, with several startups and enterprises venturing into the sector worldwide. In 2020, India’s space economy constituted about 2-3% of the global space economy. Additionally, it is estimated to reach a value of USD 44 billion by 2033, capturing nearly 10% of the global market.. This exponential growth is projected to be fuelled by increased private sector participation and substantial government support, with more than 523 companies and research institutions actively contributing.

While the space-tech sector continues to progress with technological advancements providing a boost, it’s essential to understand the legal standpoint as well, particularly the regulatory landscape when it comes to space-tech. In this article, we delve into the current scenario in the Indian space-tech segment, the investment landscape, legal considerations, tax incentives, and intellectual property rights essential for stakeholders in the space-tech ecosystem.

The regulatory framework: Facilitating innovation

India’s space-tech industry functions under a comprehensive legal and regulatory framework designed to facilitate innovation and private sector participation. Key regulatory bodies and agencies include the Department of Space (DoS), Indian Space Research Organisation (ISRO), the Indian National Space Promotion and Authorization Center (IN-SPACe), NewSpace India Limited (NSIL), and Antrix Corporation Limited (ACL). This robust ecosystem ensures that the industry is well-equipped to navigate the complexities of the space-tech landscape.

FDI & Tax incentives

The existing FDI policy allows up to 100% foreign investment in satellite establishment and operation through the government route. The proposed changes are likely to further liberalise the sector, albeit with ambiguities and gaps, particularly regarding compliance with sectoral guidelines and definitions of key terms. To encourage private participation, several tax measures have been implemented, including GST exemptions for satellite launch services and income tax exemptions for R&D expenditures.

Government schemes & initiatives

The government has allocated nearly USD 1.6 billion for the Department of Space (DoS), which oversees the Indian Space Research Organisation (ISRO) and other space-related activities. Key government schemes supporting the sector include the Startup India Seed Fund Scheme, the Technology Development Fund under DRDO, iDEX (Innovations for Defence Excellence), and the Atal Innovation Mission (AIM). These initiatives have played a pivotal role in fostering innovation and attracting private investments, with over $233 million raised across more than 30 deals by July 2023.

Proposed budget 2024 initiatives for space economy

The Indian government’s Budget 2024 introduces significant initiatives aimed at propelling the space economy to new heights. One of the key proposals includes the establishment of a ₹1,000 crore venture capital fund dedicated to expanding the space economy by five times over the next decade. Additionally, the budget proposes a full exemption of customs duties on 25 critical minerals, including lithium, copper, and cobalt, which are essential for sectors like space. The reduction of the Basic Customs Duty (BCD) on two of these minerals will further enhance the processing and refining capabilities in India, ensuring a steady supply of these vital resources for strategic sectors, including space technology. These initiatives are set to stimulate the growth of the Indian space industry, driving technological advancements and economic development.

GIFT City IFSC: A launchpad for global expansion

As one of the fastest-growing in terms of innovation and tech infrastructure, GIFT (Gujarat International Finance Tech) City provides a favourable regulatory environment, cutting-edge infrastructure, and a robust ecosystem for space-tech companies. It facilitates funding, international collaboration, and regulatory support, making it an ideal gateway for scaling operations and innovation.

Navigating the road ahead

There’s no denying that the Indian space-tech sector is poised for significant growth, driven by increased FDI, public-private partnerships, advanced technologies, and upcoming incentives. The development of reusable launch vehicles and the Gaganyaan mission, slated for 2025, is set to showcase India’s capabilities and bolster its position in the global space community. As the industry continues to evolve, stakeholders must navigate the legal and regulatory landscape to unlock new opportunities and drive sustainable growth.

AIITtechnology
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