The current size of the Indian space economy is estimated at around USD8.4 billion, with a compound annual growth rate of 4%. The size of the sector is expected to reach USD13 billion by 2025, and India aims to capture approximately 9% of the global economy by 2030 and boost the value of the industry to at least USD40 billion by 2040.

India has been at the forefront of international developments in space law and has a well-recognised global profile. It is a signatory to various international treaties including the Treaty on Principles Governing the Activities of States in the Exploration and Use of Outer Space, including the Moon and Other Celestial Bodies 1967 (“Outer Space Treaty”); the Agreement on the Rescue of Astronauts, the Return of Astronauts and the Return of Objects Launched into Outer Space 1968 (“Rescue Agreement”); Convention on International Liability for Damage Caused by Space Objects 1972 (“Liability Convention”); the Convention on Registration of Objects Launched into Outer Space (“Registration Convention”); the Agreement Governing the Activities of States on the Moon and Other Celestial Bodies 1979 (“Moon Agreement”) (although not ratified); and the Artemis Accords: Principles for Cooperation in the Civil Exploration and Use of the Moon, Mars, Comets, and Asteroids for Peaceful Purposes 2020 (“Artemis Accords”), evidencing its conscious efforts towards international co-operation and liability (“India-International Treaties”) (further detailed in 2.7 Commitment to International Treaties and Multilateral Discussions).

At the domestic level, India did not have a legislative framework governing the space sector for the first five decades of its space programme. However, the last couple of years have seen accelerated regulatory reforms including the release of the Indian Space Policy 2023 and its operational guidelines, and the establishment of a sectoral regulator (detailed in 2.2 Legal System and Sources of Space Law and Regulation and 2.3 Role of the State in Space Law and Regulations). The release of the Indian Space Policy 2023 marks a critical moment in India’s space journey and is in line with the Indian government’s objectives towards becoming a global leader in the space sector.

The Indian space programme began in the 1960s, and since its inception, India has revolutionised the space sector by developing indigenous capabilities and has become one of the leading space-faring nations. For the first five decades since the space programme’s inception, the Indian space industry was predominantly regulated and operated by its national space agency, the Indian Space Research Organisation (ISRO), which functions under the Department of Space (DOS) of the government in India. Initially, ISRO began in 1962, as the Indian National Committee for Space Research (INCOSPAR); however, in 1969, INCOSPAR was subsumed within the Department of Atomic Energy and was renamed ISRO.

In the last few years, the Indian space ecosystem has shifted gears with the establishment of the Indian National Space Promotion and Authorisation Centre (IN-SPACe) in 2020 and NewSpace India Limited (NSIL) in 2019, which are centres under DOS, acting as the drivers of commercial growth to encourage private sector participation in space activities. IN-SPACe is a single-window, independent nodal agency that functions as an autonomous agency in DOS and acts as an interface between ISRO and non-governmental entities. The Indian Space Association (ISpA), a voluntary industry association for Indian space and satellite companies, facilitates collaboration between the different stakeholders in the industry for accelerating the growth of the private sector.

Historically, India has been a protected economy, and investments from non-residents are subject to restrictions and conditions that are dependent on the sector and activities purported to be undertaken in India. Recently, India has liberalised its Foreign Direct Investment (FDI) norms in a move to attract foreign investments in the space sector and has now permitted foreign investments in Indian entities engaged in this sector subject to certain limitations that have been created based on subclassification of the activities undertaken by those entities. More details of the amendments to the FDI regime in India are detailed in 7.4 Foreign Investment in Space Activities. Further, there are several government initiatives taking place in the space sector on the internationalisation front including collaborations on space missions with international agencies, such as NASA and the European Space Agency, and the recent signing of the Artemis Accords agreement.

Such developments align with the global trends of privatisation and internationalisation, and position India as an “Aatmanirbhar” (self-reliant) nation in space, in line with the Indian government’s “Make in India” initiative.

The Indian legal system has elements of civil law, common law, equitable law, and customary and religious laws. The primary domestic sources of law include the Constitution of India, which is the supreme source of law, statutes enacted by Parliament or the state legislatures, local customs or conventions, and judicial decisions of courts holding precedential value.

In terms of the space sector, while India does not have an overarching space law that is currently effective and there exists limited jurisprudence in case law, there are other laws, policies and drafts of bills that attempt to regulate different aspects of the sector. Further, given the dynamic nature of the space sector, there are certain overlaps that exist with other sectors such as the telecommunications sector.

The following set of laws forms the governing framework for activities in the space sector. Note that some of these are drafts of legislations that are yet to be adopted as laws and are not effective at time of writing.

• Indian Space Policy 2023 (“ISP 2023”) read with the Norms, Guidelines and Procedures for Implementation of ISP 2023 in respect of Authorisation of Space Activities 2024 (“NGP 2024”): ISP 2023 outlines the vision, objectives and strategies of the Indian space programme and defines the roles and responsibilities of the different stakeholders in the Indian space ecosystem including non-government entities (NGEs), ISRO, IN-SPACe, NSIL, DOS, etc. NGP 2024 sets out the authorisation regime for space activities including space-based communication, establishment and operation of remote sensing and amateur satellite systems, access to available Indian orbital resources, dissemination of space-based earth observation/remote sensing data, operation of space transportation systems, establishment and operation of ground systems, liability-related aspects and registration of space objects. NGP 2024 also sets out the compliance regime, consent and intimation requirements, and conditions of authorisation that Indian entities engaged in space activities are required to comply with.
• Satellite Communication Policy 1997 (“SatCom Policy 1997”) read with the Norms, Guidelines and Procedures for Implementation 2000 (“NGP 2000”): Prior to ISP 2023, SatCom Policy 1997 was the only existing legislation governing the establishment and operation of satellite systems, satellite communication and launch vehicles, etc. It provided for the Indian National Satellite System (INSAT) to be leased to NGEs and for foreign satellites to operate from the Indian territory under special circumstances; NGP 2000 set out the regime on use of INSAT by NGEs, issuance of licences and use of foreign and domestic satellites. Currently, NGP 2024 sets out the authorisation regime for space-based communication.
• Telecommunications Act 2023: Governs the assignment of satellite spectrum in India. Earlier, allocation of satellite spectrum was done through auction conducted by the central government. However, under the Telecommunications Act 2023, assignment of spectrum for space research and application, launch vehicle operations, ground station for satellite control and certain satellite-based services are required to be undertaken through an administrative process.
• ISRO Act 1969: The first legislation governing space activities in India. It provided for the establishment of ISRO, entrusting it with the responsibility of development of indigenous technology, launching of satellites and conducting space research.
• Remote Sensing Data Policy 2011 (“RSP 2011”): Governs the acquisition, dissemination and distribution of remote sensing data collected from Indian and/or foreign remote sensing satellites in India and mandates licence/permission from the government, prior to undertaking such activities. NGP 2024 sets out detailed guidelines on authorisation for dissemination of space-based earth observation/remote sensing data.
• National Geospatial Policy 2022: Governs access to geospatial data and encourages open standards, open data and platforms, and enhances the role of the private sector in the creation, maintenance and monetisation of geospatial and mapping infrastructures, innovations, etc.
• Draft Space Activities Bill 2017: Proposes to regulate commercial space activities in India, this draft bill is the first comprehensive legislation on space law in India and provides for registration of space objects, and a framework for licensing, liability, insurance and intellectual property rights in relation to space activities.
• Draft Space-based Remote Sensing Policy of India 2020: Proposes to provide easier access to space-based remote sensing data and information and seeks to replace RSP 2011.
• Draft SpaceCom Policy 2020: Proposes to regulate the use of space-based communication technologies in India and seeks to replace SatCom Policy 1997.
• Draft National Space Transportation Policy 2020: Proposes to regulate independent launch activities, promote development of capability and capacity in space transportation systems, enable commercial utilisation of launch capacity and space transportation technologies, etc.
• Draft Humans in Space Policy for India 2021: Proposes to regulate Indian human spaceflight programmes.
• Draft Indian Satellite Navigation Policy 2021: Proposes to regulate satellite-based navigation in India including interface for dissemination of signal-in-space.
• Draft Technology Transfer Guidelines 2020: Proposes to regulate the transfer of technology between DOS and the space industry at large, and mandates NSIL with the role of commercialising technologies developed by DOS/ISRO.

Draft legislations are likely to be implemented in the next couple of years, and developments in upcoming sectors that have remained unregulated so far such as space data processing, space insurance, intellectual property rights in relation to space activities and assets, etc are anticipated.

As set out in 2.1 Characteristics of the Space Industry, the space industry in India has predominantly been dominated by the government, acting through DOS – the nodal space department in India, primarily functioning under the supervision of the Prime Minister’s office in India. In 1962, INCOSPAR was set up, which was superseded by ISRO in 1969.

Over the years, the Indian space industry has functioned as a participant, as a regulator and, with the onset of NewSpace (as discussed in 7.1 Impact of “NewSpace”), as a facilitator for private entities. Currently, DOS functions through different centres and units which constitute the Indian space ecosystem, and we have set out the roles and responsibilities of some of the key units of DOS below.

• Space Commission: DOS through the Space Commission formulates policies and supervises the implementation of the Indian space programme.
• ISRO: ISRO is the implementation/execution wing of DOS for the Indian space programme. It is India’s national space agency, responsible for executing Indian space programmes, and is at the forefront of space development in India. It has developed satellite launch vehicles such as PSLV and GSLV, and major space systems for communication, television broadcasting, space-based navigation, resources monitoring and management, etc. Currently, ISRO works with around 60 ministries and departments to promote space technology tools and application.
• IN-SPACe: Acts as the regulator for the granting of authorisations and permissions to private entities in the space sector. IN-SPACe acts as a single-window, independent and autonomous body, and facilitates the demands of private players by acting as an interface between ISRO and NGEs.
• Antrix Corporation Limited (ACL): Acts as the marketing arm of ISRO, under the administrative control of DOS. ACL is wholly owned by the Government of India and provides space products and services including launch, consultancy and training services, globally.
• NewSpace India Limited (NSIL): Acts as the commercial arm of ISRO, under the administrative control of DOS. NSIL is a wholly owned public sector undertaking by the Government of India and primarily facilitates transfer of technology between ISRO and other players in the Indian space industry. As the name itself suggests, NSIL was recently incorporated in light of the liberalisation of the Indian space sector for private players.

In addition to the DOS units set out above, there exist several independent units that focus on research and development in space technology.

Under ISP 2023, IN-SPACe under the aegis of DOS acts as the regulator for space activities in India and the single-window agency for authorisations. NGP 2024 details the procedure for authorisation of such space activities.

Only Indian entities are permitted to apply to IN-SPACe for authorisation (except in certain instances where non-Indian entities can directly seek authorisation), and non-Indian entities desirous of conducting space activities in India can collaborate with an Indian entity in the form of an Indian subsidiary, joint venture, partnership, etc to seek authorisations.

The following space activities need authorisation from IN-SPACe:

• establishment and/or operations of space objects;
• operations of space transportation systems;
• planned re-entry of space objects with or without recovery;
• establishment and/or operation of ground systems;
• dissemination of space-based earth observation/remote sensing data; and
• sale/purchase/transfer of space objects in orbit;

Timelines: Any Indian entity seeking authorisation can apply on a dedicated portal for application to seek authorisation from IN-SPACe at IN-SPACe Digital Platform (IDP). Upon receipt of complete application and inter-ministerial/departmental consultations, if required, IN-SPACe grants approval within a period of 75 to 120 days.

Information requirements/documentation: Further, the application form mandates varying levels of compliance and disclosure based on the proposed activity to be undertaken. However, every applicant is required to demonstrate financial and technical credentials, and operational, infrastructural and technical capabilities in relation to the activity proposed to be undertaken by the applicant. Additionally, applicants are required to disclose their net worth, significant beneficial owners (if any) and criminal records, and obtain security clearance (if sought by IN-SPACe).

In India, radio frequencies and spectrums are controlled by the central government, and the central government issues guidelines under the National Frequency Allocation Plan (NFAP) for the use of spectrum. The NFAP provides a broad regulatory framework, identifying which frequency bands are available for different services including cellular mobile service, Wi-Fi, sound and television broadcasting, radio navigation for aircraft and ships, defence and security communications, disaster relief and emergency communications, satellite communications and satellite broadcasting, etc.

The Wireless Planning & Coordination (WPC) wing of the Department of Telecommunications, Ministry of Communications, in India is the national radio regulatory nodal agency of the Government of India and represents India at the International Telecommunication Union (ITU). It is responsible for planning, engineering, regulating, managing and monitoring the limited natural resources of radio frequency spectrum and satellite orbits. Further, the Wireless Monitoring Organisation functions as a field unit of WPC and undertakes spectrum management and co-ordination to avoid interference.

For satellite communications in particular, the SATCOM Monitoring Centre (SMC) Division (earlier known as the Network Operations and Control Centre), is responsible for control, monitoring and coordination of satellite communication services and satellite-based networks in India.

It is relevant to note that until the release of NGP 2024, private players were permitted to obtain orbital slots only from WPC. However, satellite players are now permitted to approach other international agencies to obtain frequency and orbital slots (as discussed in 3.1 General Rules on Space Activities). Further, NGP 2024 imposes certain obligations upon operators to ensure non-interference (as discussed in 3.2 Principles of Non-interference and Prevention of Harmful Interference).

The Indian space sector has historically been controlled by the government. Accordingly, for the large part of India’s space journey, ISRO, through its centres such as Satish Dhawan Space Centre, Vikram Sarabhai Space Centre, etc, has been the primary entity responsible for the manufacturing and launch of space objects. However, it is relevant to note that the manufacturing of all ISRO launch vehicles was ably supported through the back-end assistance of other private entities in the market (such as Godrej Aerospace, Larsen & Toubro, ACL, etc) that were involved in supplying parts and components for manufacturing, through a subcontracting model.

As discussed in 2.1 Characteristics of the Space Industry, India has its own space programme and has launched numerous launch vehicles and satellites for the purposes of space exploration including landing a rover on the south pole of the moon and the world’s least expensive Mars mission, etc.

Further, India has relied on space assets for purposes including weather forecasting, disaster management and national security.

India has further, through its commercial arm ACL, facilitated the launching of space assets for several other countries including the USA, the UK, Japan and Germany. With the onset of NewSpace and the liberalisation of the space sector, ISRO and IN-SPACe through NSIL have made efforts towards technology transfer in the industry. Currently, several private entities in India (such as Skyroot Aerospace) are involved in designing, manufacturing and building space launch vehicles.

International Treaties/Multilateral Relations

India has been an active participant in international space law developments and is a signatory to various international treaties such as the India-International Treaties (listed in 1.1 The New Space and Space Tech Economy).

Moreover, India has entered into bilateral and multilateral relations with multiple countries and space agencies for peaceful uses of outer space. In the last five decades, India has signed over 260 space co-operation documents with 61 countries and five multinational bodies including the USA, Mexico, Japan and France in domains such as earth observation, climate actions, space exploration and space situational awareness.

International Committee/Conferences

India has been a member of the Committee on the Peaceful Uses of Outer Space (COPUOS) since its inception in 1959, where it acts as the chair of the scientific and technical subcommittee’s new working group on ‘Long Term Sustainability of Outer Space’.

Further, India is a member of the conference on disarmament and in fact presided over the conference held earlier this year in February 2024, demonstrating its commitment to prevention of use of force/weapons in outer space.

India also actively participates in Inter-Agency Space Debris Coordination Committee (IADC) activities for space debris mitigation and the activities of the IAF Space Traffic Management subcommittee for collision avoidance, disposal of space hardware, etc, showcasing its commitment towards protection of the space environment.

Domestic Legal Framework

Under the Constitution of India, India is obligated to respect international law and treaty obligations under all treaties to which it is a signatory. Such laws become binding when codified/adopted into the domestic law of the state. NGP 2024 mandates space actors to comply with the obligations under international treaties to which India is a signatory including the India-International Treaties.

India, being a party to the Outer Space Treaty, is required to follow the ‘principle of due regard’ when conducting space activities and is required to take steps to avoid harmful interference of interests of other countries. Although the principle has not been defined specifically, India implements this through imposing compliance requirements on Indian entities participating in this sector through NGP 2024.

Breach of obligations under the international treaties by any government entity and/or NGE (“Indian Entity”, as defined under NGP 2024) exposes the Indian Entity to immediate reporting/notification requirements to IN-SPACe and/or the obligation to undertake mitigation measures/provide financial or other assistance, as directed by IN-SPACe.

Further, NGP 2024 also sets out detailed guidelines re third-party liability arising out of potential damages due to space activities undertaken by Indian Entities (as set out in 2.8 Insurance and State Measures on Liability for Damages).

Space activities carry high risk and potential for damage – on ground, in air and in outer space. Under the Liability Convention, to which India is a signatory, the liability for damages caused lies with India, as a state. With the liberalisation of the space sector, the Government of India is aiming towards holding other space actors, including private entities, accountable for potential damages due to space activities undertaken by them.

Prior to the release of NGP 2024, the Indian government had also introduced indemnity, insurance and financial guarantee obligations onto private entities through the Draft Space Activities Bill 2017. In apprehension of such obligations, in 2023, ISpA, on behalf of private Indian space companies, deliberated a ‘shared-liability model’ with the government, where liability insurance for domestic satellite and rocket companies could be distributed between the private companies and the government. However, recently, the Indian government under NGP 2024 released detailed guidelines imposing third-party liability on private entities.

Guidelines on Liability Under NGP 2024

We have set out some key aspects under NGP 2024 pertaining to liability and insurance for space actors below.

• Third-party liability insurance policy: All entities engaged in space activities in India including Indian Entities and non-Indian Entities are required to procure a third-party liability insurance policy, where the terms and conditions of the insurance including minimum amount, period, cap on value of insurance amount, etc shall be prescribed by IN-SPACe. Further, all such policies are required to include the Government of India as an insured entity.
• Contractual considerations: All launch service agreements/launch contracts between a launch operator and a non-Indian Entity, for any space launches being undertaken by Indian Entities, should include a specific clause transferring the third-party liability arising to the respective non-Indian Entity.
• Indemnification: All losses, damages, costs, fees or other expenses incurred by IN-SPACe/the Government of India or its agencies under the Liability Convention or otherwise, which are attributable to an entity authorised by IN-SPACe to carry out space activities, are to be recoverable from such authorised entity.

Market Insights

Given the nascency of and lack of transparency in the space insurance sector, market data in this sphere is rare. However, recent research conducted by Spaceport SARABHAI, on the basis of a survey of leading experts in the Indian insurance industry, reveals some insights into the space insurance sector. Currently, only three types of insurance policies are available in the market – launch and in-orbit insurance, satellite life insurance and space liability insurance. However, the details of insurance providers providing these insurance policies in the market are not publicly available. Further, given the lack of precedents for such products on offer, there is no clarity on the premium amounts that would be offered by insurers. That said, in light of the developments under NGP 2024, it is anticipated that the space insurance industry will rapidly mature to address aspects of space insurance and also account for diverse space insurance offerings.

ISP 2023 defines ‘space activities’ as activities “pertaining to the space sector including launch, operation, guidance and/or re-entry of space object from outer space”. All space activities are regulated by IN-SPACe, which accords authorisations in accordance with NGP 2024. All entities carrying out space activities to or from the Indian territory or within the jurisdiction of India including the areas within its exclusive economic zone are required to seek authorisation from IN-SPACe.

It is relevant to note that authorisations under NGP are only valid for a specific period, and a separate authorisation from IN-SPACe is required in order to conduct the space activity beyond the validity period or expand the scope of its services.

Further, NGP 2024 requires space activities to be conducted in accordance with globally recognised best practices prevailing in the industry (where specific standards are not explicitly prescribed) including in areas such as data encryption, cybersecurity, etc. Notably, the space economy in India has not matured enough to percolate through to sector benefits and accordingly, current regulations on space activities are agnostic to their impact on different sectors. That said, it is expected that the percolation through to different sectors such as healthcare and life sciences, agritech, environment and energy will occur in the near future.

Under ISP 2023, a ‘space object’ is defined as “any object launched or intended to be launched into an orbital or sub-orbital trajectory around the earth or to a destination beyond earth orbit, any constituent element of such an object or any other object as notified from time to time”. NGP 2024 requires every ‘space object’ owned and controlled by an Indian Entity to be registered in the Indian national register of space objects.

In addition to general rules pertaining to space activities, NGP 2024 contains certain key considerations/restrictions as set out below.

• Definitions of ‘Indian Entity’, ‘KMP’ and ‘Control’: As discussed in 2.4 Role of the State in the Licensing Process, generally, only Indian entities that are controlled and operated by Indian citizens, ie, where the majority of the Key Managerial Personnel (KMP) are Indian citizens, are permitted to seek authorisation from IN-SPACe. It is relevant to note that NGP 2024 provides for a different definition of KMP under different permissible structures such as companies, limited liability partnerships and trusts. Further, ‘control’ refers to the right to exercise control over the management or policy decisions of the operator, whether directly or indirectly, through one or more persons acting individually or in concert.
• Change in control: NGP 2024 mandates requirement of a fresh authorisation by entities, in the event of any change in the management and control of an authorised entity or an equivalent change in the partnership or trust, resulting in the transfer of control to a non-Indian entity or entities, or if the authorised entity is no longer under Indian management and control. Further, authorised entities are required to notify IN-SPACe in the event of any change in shareholding pattern, any change in KMP, or any equivalent change in partnership or trust.
• Data disseminators: NGP 2024 permits only Indian entities to seek authorisation for dissemination of data, although the user of such data can be any individual, NGE, government entity or non-Indian entity. Further, authorised data disseminators are required to verify the credentials of the user prior to disseminating data and are required to undertake best efforts to ensure data is not re-disseminated.
• Access to international orbital data: In past years, satellite players in India were not allowed to use non-Indian orbital resources and only had access to Indian orbital resources. Through NGP 2024, India has permitted local satellite companies to use foreign orbital resources, thereby providing impetus to the satellite communications space. Indian players can now approach the ITU to use non-Indian orbital resources; however, an authorisation from IN-SPACe and compliance with principles of non-interference and prevention of harmful interference are mandatory.

India has demonstrated its commitment towards ensuring non-interference with activities of other space-faring nations and has introduced measures to prevent harmful interference with other spacecraft or space missions in its domestic framework.

In addition to being a signatory to international treaties including the Outer Space Treaty and the Liability Convention, India has been conscious of principles of non-interference and prevention of harmful interference in its space law framework as it has evolved over the years. The Draft Space Activities Bill 2017 propose to impose an obligation on entities engaged in space activities to avoid interference with the activities of other in the peaceful exploration and use of outer space.

More recently, NGP 2024 introduced non-interference and harmful interference as a critical parameter for IN-SPACe’s evaluation in the granting of authorisations to entities for carrying out space activities. Particularly, in respect of space communication, an entity seeking authorisation for the establishment and/or operation of a satellite/constellation for communication services or establishment and/or operation of a remote sensing and amateur satellite system is mandatorily required to undertake a detailed interference analysis, along with an explanation of its strategy for coexistence for providing services over the intended area without harmful interference (unless a co-ordination/coexistence agreement with the relevant satellite system already exists, in which case, reference to such agreement can be made in the application). This interference analysis and strategy explanation is further supplemented by an undertaking/declaration to be submitted by the operator to ensure interference-free services and no harmful interference to other satellite networks. Further, in cases of harmful interference, IN-SPACe reserves the right to intervene, to terminate, suspend or reject the granting of authorisation or to direct the operators to cease emissions.

It is relevant to note that through the introduction of such requirements under NGP 2024, India has adopted a proactive and precautionary stance as opposed to a reactionary stance towards non-interference and prevention of harmful interference, where the burden of justification lies with the space operators, prior to undertaking space activities.

NGP 2024 imposes certain duties and responsibilities on the space operators including adhering to safety and security guidelines, and limiting space debris and adverse environmental impacts. In relation to the operation of space transportation systems, any establishment and operation of launch facilities by Indian entities requires an environmental clearance from the relevant authorities.

In addition to a submission of undertaking confirming compliance with the Space Debris Mitigation Guidelines of UN-COPUOS, the guidelines for satellites under NGP 2024 state that the design of satellites must take into consideration minimisation of debris creation both during the operational mission period and during passivation.

Further, prior to seeking registration of space objects, operators are required to specify the orbit for launch, after conducting an assessment on space environmental population, ie, the density of space objects in space. For operation of space transportation systems, in relation to the configurations of the launch vehicles, operators are required to submit debris (spent stages) related information. Further, as a post-registration compliance, immediately after launch of space objects, operators are required to report details of any impact on the space environment to IN-SPACe.

Therefore, NGP 2024 sets out a holistic checks-and-balances regime for mitigation of space debris at every stage, from design and configuration to launch and post-launch.

Separately, at the recently held annual meeting of IADC in Bengaluru, India announced its intent towards Debris Free Space Missions (DFSM), an initiative beginning in 2025 to ensure zero-debris space missions by 2030. The ISRO system for safe and sustainable space operations management (IS4OM) under DOS has been designated as the nodal agency supervising progress and implementation of DFSM. Notably, recently, the rocket launched under ISRO’s XPOSat mission between January and March 2024 plunged into the ocean without leaving behind any space debris.

Earlier in 2019, ISRO also launched ‘Project NETRA (Network for Space Object Tracking and Analysis)’, an early warning system in space to detect debris and other hazards to Indian satellites, that aims to create greater space situational awareness.

In India, extraterrestrial resources are not considered the property of the nation/international community and/or finders/processors per se. However, a rights framework exists with respect to certain extraterrestrial resources.

For instance, under ISP 2023 certain orbital resources, ie, any GSO slot and/or NGSO along with the associated frequency spectrum and coverage acquired or in the process of being acquired by the Indian administration through a filing with the ITU, are categorised as ‘Indian Orbital Resources’.

Further, ISP 2023 encourages NGEs/private entities to engage in commercial recovery of an asteroid resource or space resource. NGEs/private entities engaged in such a recovery process are entitled to possess, own, transport, use and sell the asteroid/space resource in accordance with the international obligations of India and other applicable law. In this approach, India has positioned itself similarly to the USA and Japan, which grant private entities rights to space resources.

Although ISP 2023 grants rights to space resources to private entities as discussed in 4.1 Nature of Space Resource Rights, NGP 2024 discourages Indian entities from asserting sovereign claims on the whole or a portion of outer space, including over resources extracted from space.

At the same time, NGP 2024 recognises that all forms of extraction and utilisation of space resources do not amount to appropriation and, in an attempt to regulate the space, mandates Indian entities to obtain a separate authorisation from IN-SPACe prior to executing any plans to extract or utilise space resources. Such authorisation is subject to considerations including the necessity of undertaking such activities and the likelihood of them causing harmful interference to the space activities of other persons/nations. The authorisation process and timelines have been specified in 2.4 Role of the State in the Licensing Process for Space Activities.

India has undertaken and adopted a number of measures in relation to mitigation of adverse environmental impact and space debris (as discussed in detail in 3.3 Operators’ Responsibilities) which illustrate India’s commitment to protection of the space environment. NGP 2024 prescribes that any dereliction of such responsibilities regarding the space environment by Indian entities may result in revocation/cancellation/withdrawal of the authorisation granted by IN-SPACe to such entity.

Further, the Indian State is obligated under the Constitution of India to endeavour to protect the environment of the country and has accordingly specified detailed regulations pertaining to protection of the environment.

To that end, it may be relevant to note that the Draft Space Activities Bill 2017 proposes that every person who causes damage or pollution to the environment of the earth, airspace or outer space including celestial bodies as a result of any space activity will be liable to imprisonment up to three years and/or with a fine of up to INR1,50,00,000 (approximately USD180,000). Although no such provision has been specified under ISP 2023/NGP 2024, taking into consideration India’s proactive efforts on this front, it is likely that, going forward, future space-related legislations in India will include strict penalties in relation to environmental breaches.

Apart from the frameworks governing environment-related space activities as discussed in 5.1 Environmental Protection in Space and 3.3 Operators’ Responsibilities, India currently does not any have any specific legislation addressing climate change in relation to space activities. Having said that, it has undertaken several initiatives including satellite missions, independently and in collaboration with other countries, in this regard.

• India is at the frontier of the G20 SAT: Satellite Mission for Environment and Climate Observation, where India aims to provide spacecraft bus, satellite assembly, integration testing, etc for the launch of a satellite with payloads for environment and climate observations.
• In collaboration with NASA, in the latter half of 2024, ISRO plans to launch a radar satellite, NISAR, which will monitor the earth’s changing ecosystems, dynamic surfaces and ice masses, in an effort to study the hazards of climate change.
• Further, India has set up a database titled ‘National Information System for Climate and Environment Studies’ (NICES) to monitor climate change. In 2022, ISRO conducted a workshop on space-based information support for climate and environmental studies under NICES, thereby expanding NICES for monitoring climate change in relation to space activities.

The taxation regime in India is multifaceted, comprising both direct and indirect taxes administered by the Union government and state governments. Broadly, the direct tax regime is governed primarily by the Union government and comprises income tax, corporate taxes and capital gains taxes. On the other hand, India’s indirect taxes are levied on goods and services, under the Goods and Services Tax (GST) and other taxes such as customs duties, excise duties and various other social welfare contributions.

Direct Tax

There is no special tax regime for taxation of income derived from space activities in India. Consequently, the income derived from space activities would be taxable as per the general tax law in India in accordance with the Indian Income Tax Act, 1961 (“IT Act”) and the rules contained therein. We have set out certain key considerations in this regard:

• The IT Act taxes Indian residents on their worldwide income and non-residents on income sourced from India. Note that certain tax benefits may be available for non-residents who are tax residents of a country with which India has entered into a tax treaty.
• Indian resident taxpayers are liable to pay tax on business profits, and tax rates differ on the basis of the legal status of the taxpayer. For non-residents earning income from business activities in India or by rendering services to Indian entities, taxability depends on the nature of the activities, the manner in which the activities/services are rendered, etc; ie, essentially, whether a taxable presence is created, ie, a business connection is established or a permanent establishment (PE) is created in India.
• In the absence of a PE, non-resident Indians are liable to pay tax on royalties earned subject to withholding of tax in India at 20% and/or any tax treaty benefits. It is relevant to note that ‘royalties’ are defined broadly under the IT Act and include payments made for the right to use a piece of computer software; payments for the use of, or right to use, any industrial, commercial or scientific equipment; and payments made for transmission of signals by a satellite.
• Pertinently, the taxability of income derived by non-resident satellite companies for transmission of signals (which are ultimately used by consumers in India) has been subject to litigation in India, with the tax authorities alleging that it creates a PE in India and hence is taxable as business income. However, Indian courts have largely ruled in favour of such taxpayers by invoking the beneficial provisions under various tax treaties and have held that a satellite traversing across Indian territories cannot constitute a PE.
• Further, India also charges an equalisation levy on income derived by non-resident ‘e-commerce operators’ from ‘e-commerce supply or services’.

Indirect Tax

The indirect tax regime in India is a transaction-based taxation regime, under which events such as import, export, supply (including sale, transfer, lease, etc) of goods and/or services are subject to the levy of duties and taxes.

Accordingly, the indirect tax regime vis-à-vis space activities would entail the levying of customs taxes/duties on a transaction entailing supply of any space products and/or components thereof (both on ground goods, such as launch vehicles, and on objects meant for launch into space) and space activities (both upstream and downstream segments). As such, the import and export of space products and components are subject to customs duties, whereas local supply thereof and space activities (qualifying as supply of services) are subject to GST.

Currently, India does not have a central scheme/policy to incentivise private investments in the space sector, although certain tax incentives for enterprises engaged in space activities exist, as set out below.

• R&D expenditure incurred by taxpayers is tax deductible subject to satisfaction of certain conditions.
• Payments made for ‘satellite launch services’ are exempt from GST.
• In the context of space products and components, the existing customs framework grants exemption from customs duties for satellites, orbital launch vehicles, sub-orbital launch vehicles and components thereof (including boosters, payload fairing, adaptors and separation systems), satellite launchers, spacecraft, fuel and propellant tanks, and safety systems. Similarly, the local supply of such space products and components is exempt from GST.
• Import and local supply of specific functional accessories of such space products, ie, radars, satellite networking equipment, satellite communication terminals, radio frequency equipment, tracking systems, communication terminals (modems and routers), scientific instruments and sensors (including cameras and magnetometers), are subject to a concessional rate of customs duties and GST respectively.

Further, ISpA has made representations to the Indian government regarding various tax exemptions to boost the space industry. Such representations include wider GST exemptions for space activities, tax holidays for enterprises engaged in the space sector, a concessional tax rate for interest paid on external commercial borrowings, subsidies on capital investments, etc.

Notably, the state governments of Telangana and Karnataka, being the hub of space-related activities in India, have announced financial incentives such as subsidies and reimbursements of capital costs incurred by space tech companies. As part of the incentive package, the state governments have promised reimbursement of a certain portion of the local taxes and duties (levied by the respective state governments) incurred by the space tech companies for their business operations in these states.

Under the direct tax regime in India, the taxability of the sale or transfer of space assets would be governed under the IT Act and would depend on whether such assets are ‘business assets’ or ‘capital assets’.

Under the indirect tax regime, the existing GST framework recognises various space activities and seeks to levy tax thereon as supply of service. Notably, upstream space activities, ie, freight services (ie, carriage of satellite and other payloads) and satellite launch services are exempt from GST. However, activities relating to manufacturing and development of such engineering services with respect to space assets, maintenance and repair of satellite vehicles and launch vehicles are subject to GST. Further, downstream activities including Positioning, Navigation and Timing (PNT) applications, services, research and experimental development services, geological and geophysical consulting services, mineral exploration and evaluation, weather forecasting and meteorological services, etc are also subject to GST.

Currently, the corresponding tax policy around some of the activities contemplated for the private sector, ie, passenger carriage, launch pad management for transportation, insurance for space assets and operations, is not specifically encompassed within the existing tax framework. However, with the release of ISP 2023 and NGP 2024, the government intends to adapt the tax framework to include such space activities.

Space products and components are considered sensitive goods and are a matter of national security. Accordingly, the export of identified space objects and technologies related thereto is regulated and requires authorisation from the Directorate General of Foreign Trade, the nodal agency for trade-related regulations and enforcement in India.

Over the last five years, India has seen a significant transformation in the Indian space sector characterised by democratisation of space and liberalisation of the sector to encourage entry of private stakeholders.

Drivers of NewSpace in India: Notably, there has been an exponential rise in the participation of NewSpace companies and startups driven by regulatory reforms including the Indian Space Policy 2023 and NGP 2024, financial investments, recently introduced FDI reforms (as discussed in 7.4 Foreign Investment in Space Activities), international collaborations for facilitating technology exchange, transfer and research and development. Tangibly, the number of space tech startups has seen a jump from one in 2014 to around 189 as of December 2023.

Segmentation of NewSpace in India: Today, the activities of NewSpace actors in India have seen a shift from traditional space activities towards more segmented activities including upstream, downstream and auxiliary activities.

• Upstream activities: Involve satellite manufacturing, launch services and space transportation. Satellite miniaturisation, ease of access, and low-cost and improved global supply chains constitute key drivers of the upstream segment.
• Downstream activities: Involve application of space data towards communication, navigation, earth observation services, etc. Enhanced computational capabilities, demand for global connectivity and government focus on use of space for SDGs constitute key drivers of the downstream segment.
• Auxiliary activities: Involve space insurance, education and training programmes, etc. Increased commercialisation, collaborations, technology transfers, etc constitute key drivers of the auxiliary segment.

Investment scenario and forecast: Such diversification of capabilities by NewSpace actors has attracted significant venture capital investments. In the NewSpace era, Indian space tech startups have raised over USD250 million. Companies that have received venture capital funding over the last couple of years are in advanced stages of their operations, with certain companies setting up their manufacturing plants and planning launches in the next few years. This is likely to result in a significant increase in their valuations.

Admittedly, financial investors in the sector are very bullish, and a number of new-age private entities raised significant amounts of early-stage/growth capital in the year 2023. In fact, it is anticipated that, in 2024, funding by space tech companies will surpass previous benchmarks and lead to supercharged growth in the activities and operations of companies engaged in this sector. Further, the opening up of the FDI space is likely to encourage local investments in the space sector. As an estimate, the Indian government believes that India’s space economy will soar to USD40 billion by 2040.

Government funding: Given that the space sector in India was largely government-dominated for five decades, funding from the government constituted one of the main sources of finance for space activities. DOS, as the nodal space department, was allocated funds from the Union Budget of India for space programmes, satellite launches, infrastructure development and other research and development activities. Further, in addition to government funding, DOS also generates revenue through its commercial arms, ACL and NSIL, engaged in marketing and commercial space activities.

Private investments: In the last few years, with the onset of NewSpace, private investments including from venture capital firms, private equity investors, incubators, accelerators, etc have played a large role in the growth of the space startups ecosystem, although limited to equity funding and generally at an early stage. During March-December 2023, space startups have attracted investments worth USD124.7 million.

Other government initiatives: Separately, government initiatives such as IN-SPACe’s recent SEED Fund Scheme to provide INR1 crore/USD121,000 to space startups alongside mentorship and training support, have added to the sources of financing available in India.

Subsidiaries/joint ventures for foreign entities: Notably, NGP 2024 mandates foreign entities desirous of engaging in space activities in India to incorporate an Indian subsidiary or enter into a joint venture or other such collaboration arrangements with Indian entities to seek authorisations from IN-SPACe, thereby encouraging foreign investments in the space sector in the form of subsidiaries and joint ventures.

Enhanced private participation: With the introduction of ISP 2023, NGEs/private entities were permitted to engage end-to-end in all domains of the space actor, attracting investment from several investors including Alphabet Inc, which invested USD36 million in a Bengaluru-based satellite imaging startup, Pixxel.

Regulatory reforms: Recent government, legislative and policy reforms have steered towards attracting greater investments in space activities. Arguably, the regulatory regime is still unclear on certain aspects; however, with the release of NGP 2024, there now exists higher regulatory clarity on various aspects and activities in the space sector. Further, efforts by ISRO towards the granting of governmental contracts to private entities have offered investors much-needed assurance, thereby facilitating capital investments even amidst the regulatory flux.

Tax incentives: The Indian government’s efforts towards providing tax incentives as outlined in 6.2 Tax Incentives for Space Investors make India a key destination for investors in the space sector.

Infrastructure: India has a robust foundation of launch space infrastructure, and ISRO provides access to its testing facilities, infrastructure and expertise, all of which form key attractions for investors.

Historically, the Indian space sector was restricted and predominantly controlled and operated by the government. In 2020, the Indian foreign direct investment policy (“FDI Policy”) in the space sector was amended, and certain reforms were introduced, to encourage private sector participation in the ‘establishment and operation of satellites’ sector. However, such investments were permitted only under the government approval route.

More recently, in 2024, the Indian government approved amendments to the FDI Policy, further liberalising the sector and providing impetus to its growth in India. The amendments allow for foreign direct investments under the automatic route (where no government approval is required) to varying degrees, and subdivisions/subsectors have been created for underlying activities within the larger sphere of ‘establishment and operation of satellites’. The entry routes for the various activities under the FDI Policy are categorised follows:

A. Up to 100% under automatic route – manufacturing of components and systems/subsystems for satellites, ground segment and user segment;

B. Up to 74% under automatic route – satellite manufacturing and operation, satellite data products and ground segment and user segment; and

C. Up to 49% under automatic route – launch vehicles and associated systems or subsystems, creation of spaceports for launching and receiving spacecraft.

Note that investments beyond 74% under category B and beyond 49% under category C require prior approval of the relevant sectoral regulator under the government route.

In addition to this, any foreign direct investment from any countries that share a land border with India (ie, Pakistan, China, Bangladesh, Bhutan, Afghanistan, Nepal and Myanmar) requires prior government approval.

The role of securities markets in financing space activities in India is yet to mature. Given the nascency of NewSpace actors, public offerings/trading of securities in public markets vis-à-vis space companies will have its gestation period in India and we anticipate that Indian space tech companies will list on the stock exchanges in the coming few years.

Having said that, there exist certain conglomerates that are listed companies and have diversified their investments and ventured into the space sector including Bharti Enterprises Limited, Larsen & Toubro Limited, Hindustan Aeronautics Limited and Apollo Micro Systems. As specified in 2.6 Role of the State in the Launching Process, these private entities have ably supported ISRO and other public sector enterprises in relation to their space-related activities and have contributed to development of Indian launch vehicles and space missions.

At present, the activities of this group of companies constitute the limited role that the securities market in India plays in the space sector. However, with the advent of new technologies and liberalisation of the FDI Policy, it is expected that the securities market will contribute to the financing of space activities in a significantly larger manner.