In this era marked by rapid technological advancements, the space tech industry has become a beacon of innovation and progress. Over the past decade, the sector has undergone significant transformation and growth, primarily due to the rise of domestic startups and increased investments. Recognizing the potential of this fast-growing industry and the need for a systematic understanding, Treelife, a renowned multi-disciplinary services firm comprising lawyers, chartered accountants and company secretaries, has launched a detailed report titled, “Mapping India’s Space Tech Industry and Regulatory Landscape: A Springboard for Innovation and Growth”. The report provides a comprehensive overview of the industry, covering key aspects such as investment landscape, legal considerations, tax incentives, intellectual property rights, etc. that are essential for stakeholders in the space tech ecosystem.
A growing industry with great potential
India’s space technology industry is on an impressive growth trajectory. With over 523 private companies and research institutes actively contributing to the sector, India’s space economy is projected to reach $44 billion by 2033, accounting for about 10% of the global market. Significant government investments, including an allocation of about $1.6 billion to the Indian Space Research Organisation (ISRO) and India’s Department of Space (DoS), which oversees other space-related activities, underscore India’s determination to become a leader in space exploration and technology.
Treelife’s report highlights a surge in private investments since 2014, especially in satellite manufacturing and launch services. By July 2023, these investments reached $233 million across over 30 deals. The report highlights that focus areas for private investments in India’s space technology ecosystem include satellite manufacturing, launch services, Earth observation and analytics, propulsion systems, integrated space solutions, etc. Funding trends within this sector are also discussed, with funding expected to reach an all-time high of $124.7 million in 2023, with consistent year-on-year growth expected from 2021 to 2023.
Foreign Direct Investment and the Regulatory Environment
The report takes a detailed look at the Foreign Direct Investment (FDI) sector and finds that the current FDI policy allows up to 100% foreign investment in setting up and operating satellites through the government route. Though the proposed amendments aim to further liberalise the sector, gaps and ambiguities remain, particularly with regard to compliance with sectoral guidelines and definitions of key terms.
Treelife’s analysis highlights the importance of a clear and consistent regulatory framework to attract and retain foreign investment, and the report suggests that addressing these gaps is crucial to maintaining the sector’s growth momentum and enhancing its global competitiveness.
Tax incentives and government schemes
To encourage private participation, several tax incentives have been put in place, including GST exemption on satellite launch services, income tax exemption on research and development expenditure, etc. The report also highlights key government schemes to support the sector such as Startup India Seed Fund Scheme, Technology Development Fund under DRDO, iDEX (Innovations for Enhanced Defence), Atal Innovation Mission (AIM), etc.
Additionally, the report also highlights how GIFT City (Gujarat International Finance and Technology City) has emerged as a global gateway for space technology companies. GIFT City offers a favorable regulatory environment, state-of-the-art infrastructure and a robust ecosystem. It facilitates fundraising, international collaboration and regulatory support, making it an ideal gateway for business expansion and innovation.
Insights from Industry Leaders
Commenting on the report’s findings, Garima Mitra, Co-Founder, Treelife said, “India’s space tech sector is poised for significant growth, driven by increasing FDI, public-private partnerships, advanced technologies and upcoming incentives. Treelife’s report marks an important milestone in understanding the complexities of India’s space tech landscape and provides key insights to guide stakeholders in navigating the regulatory environment and maximizing opportunities for growth and innovation. We remain committed to helping startups understand the regulatory environment and work accordingly.”
