Space Tech: IN-SPACe & FDI Rules

Why India's Space Sector Is Now Open for Foreign Investment

India's space economy is valued at approximately USD 9 billion in 2025, with projections to reach USD 44 billion by 2033, growing at a 9.5% CAGR. Until 2020, India's space sector was essentially a government monopoly run by ISRO. The creation of the Indian National Space Promotion and Authorization Center (IN-SPACe) in 2020 and the landmark FDI policy amendment of February 2024 have fundamentally changed this landscape.

India now ranks fifth globally in the number of space companies, with over 400 private space startups and cumulative funding exceeding USD 726 million as of December 2025. The Union Cabinet has also approved a INR 1,000 crore venture capital fund specifically to accelerate space startup growth. For foreign companies with space technology, components, or satellite expertise, India represents a rare combination: a rapidly liberalizing regulatory environment, a deep engineering talent pool producing 1.5 million STEM graduates annually, and a government that is actively courting international participation.

FDI Policy Framework: The Tiered Approach

On 21 February 2024, the Union Cabinet approved a comprehensive FDI policy for the space sector, effective from 16 April 2024. Unlike many Indian sectors where a single FDI cap applies, the space sector uses a graded three-category structure under the automatic route and government approval route.

Category 1: Satellites (Manufacturing and Operation), Satellite Data Products, Ground and User Segments

Up to 74% FDI is permitted under the automatic route. Beyond 74%, investment requires government approval. This category covers the largest commercial opportunity: manufacturing, launching, and operating satellites for communication, Earth observation, navigation, and remote sensing. It also includes ground station equipment and satellite data analytics platforms.

Category 2: Launch Vehicles and Associated Systems, including Spaceports

Up to 49% FDI is permitted under the automatic route. Beyond 49%, government approval is required. This is the most restricted category, reflecting national security sensitivities around launch technology. Foreign companies interested in launch vehicle manufacturing or spaceport development need to plan for the government approval timeline, which typically adds 4-8 weeks beyond the standard FC-GPR filing process.

Category 3: Manufacturing of Components and Systems for Satellites, Ground Segment, and User Segment

Up to 100% FDI is permitted under the automatic route. This is the most liberalized category, reflecting India's strategy to become a global hub for space component manufacturing. No government approval is needed regardless of the ownership percentage, making it the fastest entry path for foreign space companies.

For a detailed comparison of the automatic and government routes across all Indian sectors, see our automatic route vs government approval comparison.

Indian Space Policy 2023: The Regulatory Foundation

The Indian Space Policy 2023, approved by the Cabinet Committee on Security, is the foundational document governing private and foreign participation in India's space sector. It defines the roles of three key institutions:

• ISRO: Focuses on research, development, and advanced space technologies. ISRO will no longer be the sole operator but will share its infrastructure and transfer technology to the private sector.
• IN-SPACe: The single-window authorization and regulatory body for all space activities by non-governmental entities (NGEs). IN-SPACe authorizes launches, satellite operations, ground stations, and data dissemination.
• NewSpace India Limited (NSIL): The commercial arm that handles technology transfer from ISRO to industry and manages commercial launches on ISRO's vehicles.

Under the policy, non-governmental entities are allowed to undertake end-to-end activities including satellite design, manufacturing, launch, operation, and data services. NGEs can own, procure, or lease satellites, and can provide communication and remote sensing services both within India and internationally.

IN-SPACe Authorization: Step-by-Step Process

Every foreign company conducting space activities in India must obtain IN-SPACe authorization. Here is the practical process:

Step 1: Establish an Indian Entity

Foreign companies cannot apply to IN-SPACe directly. You must operate through an Indian entity, which can be a wholly owned subsidiary, a joint venture, or a collaboration arrangement with an Indian company registered under the Companies Act, 2013. For most foreign space companies, incorporating a Private Limited Company via SPICe+ is the standard approach. This takes 7-15 working days.

Step 2: Submit Authorization Application to IN-SPACe

Submit your application through the IN-SPACe portal (inspace.gov.in) detailing the proposed space activity, technical specifications, safety protocols, orbital parameters (for satellite operations), frequency coordination requirements, and compliance with international space law obligations.

Step 3: Technical and Security Review

IN-SPACe conducts a multi-stage review covering technical feasibility, safety assessment, spectrum coordination with the Wireless Planning and Coordination Wing (WPC), and national security clearance from the Ministry of Defence where applicable.

Step 4: Authorization Grant

The authorization process takes approximately 75-120 days. Applicants are advised to initiate the process at least 6 months before the intended commencement of space activities. Authorization is activity-specific: a separate authorization is needed for each satellite, launch, or ground station operation.

Step 5: Ongoing Compliance

Authorized entities must comply with reporting requirements, safety standards, orbital debris mitigation guidelines, and periodic reviews. IN-SPACe has the authority to modify, suspend, or revoke authorization for non-compliance.

Satellite Communications: The Satcom Opportunity

The satellite broadband market in India is witnessing a surge of activity. As of April 2025, more than 10 satellite operators have applied for IN-SPACe authorization to provide satellite capacity in India. Three operators have secured full regulatory clearance:

• Eutelsat OneWeb: Authorized through OneWeb India Communications Private Limited
• Jio-SES Joint Venture: Authorized through Jio Satellite Communication Limited
• Starlink: Starlink Satellite Communications Pvt. Ltd. received its IN-SPACe authorization in July 2025 (following its DoT GMPCS license in June 2025), becoming the third fully cleared satellite communications operator

A critical deadline applies: from 1 April 2025, only non-Indian satellites that have obtained IN-SPACe authorization are permitted to provide satcom services in India. Foreign satellite operators providing services without authorization face enforcement action.

The Telecom Regulatory Authority of India (TRAI) released spectrum recommendations in May 2025, proposing satellite spectrum assignment for five years with an option for a two-year extension. This provides commercial certainty for foreign operators planning India market entry.

India's Private Space Startup Ecosystem

Foreign companies considering India should understand the domestic competitive landscape. India's space startup ecosystem has grown rapidly:

Launch Vehicle Companies

• Skyroot Aerospace (Hyderabad): India's leading private launch company, with USD 99.8 million in funding as of December 2025. Successfully test-fired the Kalam-1200 solid booster in August 2025 and is preparing the Vikram-1 orbital launch.
• Agnikul Cosmos (Chennai): Developing the Agnibaan small-lift launch vehicle with 3D-printed semi-cryogenic engines. Announced a INR 121 crore investment for a rocket manufacturing facility in Tuticorin, Tamil Nadu, generating 525 jobs.

Satellite and Earth Observation Companies

• Pixxel (Bengaluru): Building a constellation of hyperspectral Earth-imaging satellites. Launched three of six satellites in the Firefly Constellation in January 2026 for agriculture, mining, and infrastructure monitoring.
• Dhruva Space (Hyderabad): Developing small satellites for commercial, government, and academic markets since 2012.

Defence and Dual-Use

• Solar Group: Investing INR 12,870 crore in MIHAN Nagpur for manufacturing defence-grade drones and UAVs for global export, plus INR 660 crore in a solar power plant, creating 7,670 jobs combined.

This ecosystem represents both competition and collaboration opportunity. Many Indian space startups actively seek foreign technology partnerships, joint ventures, and supply chain integrations. Read our guide on aerospace and defence FDI for sector overlap insights.

Key Space Tech Hubs in India

Space technology activity concentrates in three primary clusters, each with distinct advantages for foreign companies:

• Bengaluru: India's space capital. Home to ISRO headquarters, IN-SPACe, NSIL, and the Indian Institute of Science (IISc). Most space startups including Pixxel, Bellatrix Aerospace, and Astrogate Labs are headquartered here. Best for satellite design, software, and data analytics operations.
• Hyderabad: Emerging as a manufacturing hub for space hardware. Skyroot Aerospace and Dhruva Space are headquartered here. Telangana's aerospace and defence policy offers dedicated incentives. DRDL (Defence Research and Development Laboratory) provides a defence-space crossover ecosystem.
• Chennai: Agnikul Cosmos and several component manufacturers operate here. Proximity to the Sriharikota launch centre (SDSC-SHAR) makes it ideal for launch-adjacent companies. Tamil Nadu offers incentives for advanced manufacturing including aerospace components.

Foreign companies should choose their location based on the specific sub-sector: Bengaluru for software and satellite operations, Hyderabad for hardware manufacturing, and Chennai for launch vehicle components and testing.

Entity Structure for Space Sector FDI

The optimal entity structure depends on your FDI category:

For a comparison of entity types, see our branch office vs subsidiary comparison and Pvt Ltd vs OPC vs LLP comparison.

Compliance and Reporting Requirements

Foreign-invested space companies in India must comply with both general FDI compliance and space-sector-specific requirements:

General FDI Compliance

• File FC-GPR within 30 days of share allotment to report foreign investment to the RBI
• File FLA Return by 15 July each year with the RBI
• Transfer pricing documentation for all related-party transactions
• GST registration for supply of goods and services within India
• Corporate tax at 22% (plus surcharge and cess, effective ~25.17%) under Section 115BAA; the 15% concessional rate under Section 115BAB closed to companies not manufacturing by 31 March 2024 and was not extended

Space-Sector-Specific Compliance

• IN-SPACe authorization renewal and periodic review
• Spectrum licensing through the Wireless Planning and Coordination Wing (WPC)
• Orbital debris mitigation compliance per ISRO/UN guidelines
• Export control compliance for dual-use technologies under India's SCOMET (Special Chemicals, Organisms, Materials, Equipment and Technologies) list
• Data localization requirements for certain categories of satellite imagery (high-resolution data may require government permission for dissemination)

For companies with cross-border transactions, ensure compliance with FEMA regulations and file Form 15CA/15CB for all outward remittances.

Government Incentives for Space Manufacturing

India offers several incentives relevant to space technology companies:

• Production Linked Incentive (PLI) Scheme: While there is no dedicated PLI for space, components that qualify under electronics, telecom equipment, or advanced chemistry cell (ACC) battery PLI schemes can benefit.
• Section 115BAB (Concessional Tax): New manufacturing companies incorporated after 1 October 2019 and commencing production before 31 March 2024 could avail a 15% corporate tax rate (effectively 17.16% with surcharge and cess). This window has closed and was not extended — new manufacturers now default to 22% (effectively 25.17%) under Section 115BAA.
• SEZ Benefits: Space manufacturing units in Special Economic Zones can access customs duty exemptions on imported raw materials and components, plus tax holidays on export profits.
• State Incentives: States like Telangana, Tamil Nadu, and Karnataka offer additional incentives for aerospace and defence manufacturing including land subsidies, stamp duty exemptions, and SGST reimbursements.
• INR 1,000 Crore VC Fund: The government-backed venture capital fund for space startups can co-invest alongside foreign investors, reducing risk and signaling government support.

Contact our FDI advisory team for a customized incentive analysis based on your specific space sector activity.

Cost Breakdown: Setting Up a Space Tech Company in India

Understanding the full cost structure helps foreign companies plan their India entry budget realistically. Costs vary significantly based on whether you are establishing a manufacturing operation, a satellite operations centre, or a software and data analytics hub.

For a satellite component manufacturing subsidiary with 50 employees in an SEZ, expect first-year setup costs of approximately INR 1.5-3 crore (USD 180,000-360,000), excluding capital equipment. Ongoing annual operating costs (excluding salaries and raw materials) typically range from INR 30-60 lakh.

Salary Benchmarks for Space Tech Talent

India's space tech talent pool is its strongest competitive advantage. ISRO's decades of R&D have created a base of experienced engineers, while IITs and IISc produce fresh talent annually. Typical salary ranges for foreign space companies hiring in India:

• Junior engineer (0-3 years): INR 6-12 lakh per annum
• Mid-level engineer (3-8 years): INR 12-25 lakh per annum
• Senior engineer/specialist (8-15 years): INR 25-50 lakh per annum
• Ex-ISRO scientist: INR 30-80 lakh per annum (depending on seniority and specialization)
• Space law/regulatory specialist: INR 15-30 lakh per annum

These salaries are approximately 60-75% lower than equivalent roles in the US or Europe, making India an attractive location for R&D centres and manufacturing operations even before factoring in government incentives.

Common Mistakes Foreign Space Companies Make in India

1. Applying to IN-SPACe without an Indian entity: IN-SPACe only accepts applications from Indian-registered entities. Set up your subsidiary or JV first, then apply.
2. Misclassifying the FDI category: A company manufacturing satellite components (Category 3, 100% auto) versus operating a satellite (Category 1, 74% auto) faces very different approval requirements. Incorrect classification can delay projects by months.
3. Ignoring the April 2025 satcom deadline: Foreign satellite operators providing services in India without IN-SPACe authorization from 1 April 2025 face enforcement action.
4. Underestimating export control complexity: Space technology often falls under India's SCOMET list and foreign countries' export control regimes (ITAR for US companies, EAR for dual-use items). Dual compliance is essential.
5. Not budgeting for spectrum licensing: Satellite communication services require separate WPC spectrum authorization beyond IN-SPACe approval. Budget 3-6 months for this process.

Key Takeaways

• India allows up to 100% FDI in space component manufacturing under the automatic route, 74% for satellite operations, and 49% for launch vehicles
• All foreign space companies must operate through an Indian entity and obtain IN-SPACe authorization, which takes 75-120 days
• India's space economy is valued at USD 9 billion (2025) with projections to reach USD 44 billion by 2033 at a 9.5% CAGR
• Over 400 private space startups operate in India with cumulative funding exceeding USD 726 million, creating partnership opportunities
• Satellite broadband is the most active sub-sector, with Starlink, OneWeb, and Jio-SES already authorized for operations
• The 15% concessional corporate tax rate under Section 115BAB closed to companies not manufacturing by 31 March 2024 and was not extended; new manufacturers now pay 22% (effective ~25.17%) under Section 115BAA
• Space manufacturing in SEZs offers customs duty exemptions and export profit tax holidays
• File FC-GPR within 30 days and FLA Return by 15 July each year for FEMA compliance