ISRO Chief S Somanath Dispels FDI Fears While Breaking Down Space Economics at Republic Summit

New Delhi:  ISRO chairman S Somanath, speaking at the Republic Summit on Thursday, shed light on the economic dynamics of the space sector and addressed concerns regarding foreign investment (FDI). When asked if the recent allowance of 100 percent foreign direct investment in ISRO would mean increased control by foreign players and whether this could be a concern, the ISRO Chief replied, stating, “This concern arises from a lack of understanding of the economics of space activities.” 

Following that, the ISRO chief broke down space economics in what could be perceived as a more layman-like manner.

Dominance of Applications in Space Economy 

According to Somanath, the space economy, currently valued at around 500 billion dollars, is primarily driven by applications rather than rocket building and launch activities. He explained that nearly 70 percent of the financial activity in the space sector revolves around applications such as ground operations, connectivity, and network services. Satellite construction accounts for around 15 percent, while the remaining portion comes from rockets and launch vehicles. Following this, Somanath said, "It's important to note that the rocket-building and launching segments are not highly profitable.”

However, Somanath did clarify that while rocket building and launch are not highly profitable ventures, there are important opportunities in satellite-related services like image processing, communication, navigation, and weather forecasting.

ISRO Chief Addresses the Need for FDI

He also underlined the importance of attracting investment in these application sectors, which can subsequently drive demand for satellites and launch services. Addressing concerns about FDI and control from foreign players, Somanath outlined the regulatory framework already in place to safeguard national interests.

He explained that while FDI up to 100 percent is allowed in the application sector, it is limited to 74 percent in the satellite sector and only up to 49 percent in the launcher sector. Further, Somanath also reassured that foreign players cannot directly engage in building rockets without government approval, ensuring careful scrutiny of their involvement in critical space infrastructure.