Insights
To infinity and beyond in space and M&A
February 13, 2025India’s space industry is transforming, driven by visionary governmental reforms and increasing private interest. Once dominated by the Indian Space Research Organisation (ISRO), launch and development of space vehicles is now open to private players. This has sparked innovation, investment and strategic collaboration. M&A is set to play a pivotal role in this rapidly evolving market because of the high technical barrier to entry and evolving regulation. India provides cost-effective and innovative space solutions. The ISRO has consistently delivered impressive results, from satellite launches to interplanetary missions. However, historically private involvement in the space sector was limited to supplying components and materials to the ISRO. In 2020, the government set up the Indian National Space Promotion and Authorisation Centre (IN-SPACe), a regulatory body facilitating collaboration between the ISRO and private enterprises. Access to the ISRO’s facilities and resources through the IN-SPACe created opportunities for innovation and competition.
The Space Policy 2023 has defined the roles of the ISRO, IN-SPACe and private entities, emphasising commercialisation, international collaboration and domestic development. Private companies building, owning and operating space assets set India on its way to becoming a global hub of outer space operations and a prominent contender in the USD400 billion global space economy.
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Regulations are evolving rapidly. The 2024 Space Guidelines provided much-needed clarity for the authorisation, management and operation of private entities. International players are encouraged to collaborate with local companies or set up subsidiaries.
Foreign direct investment (FDI) policy, allowing up to 100% FDI in satellite manufacture and operations under the government route, increases the sector’s appeal. Regulatory safeguards and high technical barriers to entry are attractive to domestic and foreign investors. M&A drives growth, enabling companies to pool resources, share risks and accelerate technological advances. The space industry is capital-intensive and complex. Acquiring smaller set-ups developing niche technologies, such as AI-powered orbital analytics or advanced propulsion systems, helps companies integrate cutting-edge solutions, improving their competitiveness. Acquiring such specialised startups reduces R&D costs and shortens time-to-market. New players are also able to access the market more easily. A fragmented private space sector offers significant opportunities for consolidation. Acquisitions help optimise supply chains, expand manufacturing capabilities and achieve cost efficiency, increasing the industry’s affordability and global competitiveness. Cross-border M&A brings foreign expertise, funding and market access while allowing local companies to collaborate on advanced technologies such as reusable launch vehicles and deep-space exploration. International partnerships lead to accelerated growth in local development and innovation.
Capturing a larger share of the global space economy aligns with India’s broader goals of self-reliance and innovation. Developing satellites for remote sensing, satellite delivery systems, internet services and navigation is likely to drive consolidation and growth. M&A allows private players to achieve the scale and expertise required to compete globally. Public-private collaboration and regulatory clarity are keys to attracting further investment and fostering innovation. Despite its potential, the industry faces significant challenges. Insurance, dispute resolution and intellectual property rights need greater clarity to foster investor confidence. The sector is in its infancy, with limited private players achieving operations at scale. Sustained government support is needed along with enhanced private initiatives.
Increased competition requires complying with global ethical standards and preventing monopolistic practices. The government must ensure a supportive regulatory framework to encourage innovation while protecting national interests. Public-private partnerships and dialogue will bridge the gap between policy and practice. Private participation is unlocking growth and innovation. M&A will be pivotal, enabling companies to overcome technical and financial barriers while fostering collaboration and technology advancement. Regulatory support, public-private collaboration and sustained investment will position India as a space economy global leader, driving national and global progress.
This article was originally published in India Business Law Journal on 13 February 2025 Co-written by: Arvind Sharma, Partner; Kartike Rana, Associate; Aarushi Mittal, Associate. Click here for original article
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Contributed by: Arvind Sharma, Partner; Kartike Rana, Associate; Aarushi Mittal, Associate
Disclaimer
This is intended for general information purposes only. The views and opinions expressed in this article are those of the author/authors and does not necessarily reflect the views of the firm.
