No imminent change to foreign investment strategy in space: In-Space's Pawan Goenka

Mint

06-05-2025

Mumbai: The Centre does not intend to alter its foreign direct investment (FDI) strategy in the space sector, said Pawan Goenka, chairman of the Department of Space-affiliated regulatory body for the space industry, Indian National Space Promotion and Authorization Centre (In-Space), on Monday.
Based on the Union government's amended space FDI policy from February last year, India allows foreign investors to acquire up to 49% of a domestic space company that operates at the most critical sensitivity level without needing government approval. While the move enabled foreign funds to officially invest in India's space startups, various parties have highlighted that the limited funding structure could hamper large funding rounds in the space industry.
'We don't have any plan in the short term to change the FDI policy in space. We'll continue to observe this industry, and our goal is to balance the industry between foreign investments and the prospects for domestic firms. We don't want India's domestic space ventures to be completely dependent on foreign investments, which is why a 49% cap has been put on direct investments in the space sector,' Goenka said.
The top executive said the government 'has not received inputs from any stakeholder' that a larger FDI quantum should be made accessible to foreign investors, as of now. 'We want the majority stake in space ventures to be with the domestic founders in the most critical ventures in the interest of security and defence, while up to 100% foreign investments are directly permitted in the space industry for non-critical application makers and other startups,' he said.
Foreign capital is critical for the space sector to grow, as the worldwide space market has highlighted over the past decades. Elon Musk-backed private space startup SpaceX, currently the most successful in terms of funding, valuation and frequency of launches, is valued at $350 billion—with over $11 billion raised in private capital during its lifespan.
Indian space startups, on this note, are yet to hit unicorn status. Hyderabad-headquartered Skyroot Aerospace and Bengaluru-headquartered Pixxel are the most-funded in India, having raised $95 million each to date. For both, funding rounds have been led by global firms—Singapore's Temasek for Skyroot, and the US' Google for Pixxel, among others.
India's sole global-scale space startup acquisition also took place last month, when US-based biotechnology firm Helogen Corp. acquired Tamil Nadu-based Vellon Space on 30 April for an undisclosed amount.
This underlines the importance of foreign funds in a market that currently retains a minuscule fraction of the global space market—with Goenka estimating India's space industry to be worth $10-12 billion at the moment.
Industry veterans underlined that this is a crucial challenge. 'The key challenge for India's space sector lies in the fact that, beyond a handful of star startups, most others have not attracted funding at scale. Protecting domestic companies and their innovation is a major factor behind limiting automatic FDI in the most critical space sub-sectors. Still, if protecting core patents or large business orders was the key goal, then by now, large domestic conglomerates would have invested in space startups,' said Chaitanya Giri, space fellow at global think tank Observer Research Foundation (ORF).
Giri added that despite a 'protectionist FDI, domestic investors have not come ahead. Whether it is a lack of awareness of the overvaluation of our startups can be debated.'
Goenka, however, said the Centre is investing in giving Indian space firms access to capital, even apart from global investors. 'We have operationalized the $120 million venture capital (VC) fund—through which we will start funding startups as soon as the next quarter. For us to reach the goal of a $44 billion space economy by 2033, a net investment of $22 billion will be required. A part of this will be through the Indian Space Research Organisation (Isro), alongside $2.5 billion or more through foreign investors. A lot of this will be through domestic firms such as the Tata group and Larsen & Toubro, who are already investing in the space sector,' he said.
The VC fund, which was announced during the first of two interim budgets by the Centre last year, received its first fund manager in Sidbi Ventures on 21 March. Goenka affirmed that it will roll out its first funding 'by the next quarter, with an average ticket size of $8-10 million.'
ORF's Giri said that a bigger factor apart from FDI stalling large investments in India is the structure of the startup economy today. 'The Indian space sector should consider looking at non-US space business models and creating one of its own. More than the valuation game, the Indian commercial space sector should consider playing the revenue and business orders game,' he said.
Closely scrutinizing the European business model, now that they are exploring the potential of their autonomy, and that of Africa, South-East Asia and the Middle East, will give Indian space companies greater revenue to chase and innovation to follow—it does not have to emulate the US style of space commerce, Giri added.
Goenka, however, was optimistic. The executive underlined that formal guidelines for approving large-ticket space funding efforts from abroad through FDI are 'soon to be approved in the coming months.'
Adding up all initiatives, Goenka further said that the Centre has earmarked a net quantum of nearly $480 million to be rolled out over around five years for activities such as setting up space manufacturing hubs in Tamil Nadu, Gujarat, and others, as well as ramping up demand from inter-ministerial agencies in fields such as agriculture, disaster management and more.
First Published: 6 May 2025, 02:04 PM IST