The government is poised to classify satellite broadband as a telecom service, making companies like Bharti-backed Eutelsat OneWeb, Elon Musk’s Starlink, Jeff Bezos-led Amazon Kuiper, and Canada’s Telesat eligible for 100% foreign direct investment (FDI) through the automatic route, similar to telecom service providers, according to top lawyers and senior satellite industry executives. This move is expected to provide much-needed clarity to global investors regarding foreign ownership rules, particularly for companies planning to introduce broadband-from-space services in India, potentially attracting significant investments into India’s satcoms sector.
However, companies engaged in manufacturing or operating satellites or in generating/disseminating earth observation/remote sensing satellite data and data products will only qualify for 74% FDI through the automatic route under the amended FDI rules for the space sector issued by the commerce ministry. To achieve foreign ownership of 100%, these companies would need to seek government approval.
Anirudh Rastogi, managing partner at Ikigai Law, a tech-focused law firm advising major satellite service players, emphasized that the latest amendments to the space sector FDI rules primarily concern the manufacture and operation of satellite systems, ground/user segment supply, and earth observation data products. Rastogi noted that telecom services, even if provided by satellites, are not covered and should be governed by telecom FDI rules.
Industry experts anticipate the Department for Promotion of Industry & Internal Trade (DPIIT), the Department of Telecommunications (DoT), and the Department of Space (DoS) to clarify the status of satellite broadband services under telecom FDI regulations. A.K. Bhatt, director-general of the Indian Space Association (ISPA), highlighted that if satellite broadband services indeed fall under telecom FDI rules, it would attract substantial investments from global satellite broadband players like Eutelsat OneWeb, Starlink, Amazon Kuiper, and Telesat.
India’s space economy, estimated by the space sector regulator IN-SPACE to reach $44 billion by 2033, presents significant growth potential. Broadband-from-space services aim to serve populations currently underserved by traditional broadband solutions, particularly in rural and remote areas lacking high-speed internet access. The recent amendments to space sector FDI rules by the Cabinet include allowing up to 49% FDI under the automatic route for satellite launch vehicles and up to 100% FDI under the automatic route for manufacturing satellite sector components and sub-systems.
