Early decades

India's interest in space travel began in the early 1960s, when scientists launched a Nike-Apache rocket from TERLS, Kerala.^[6][7] The Indian National Committee for Space Research was subsequently set up, which later became the Indian Space Research Organisation (ISRO)^[11] functioning under a new independent Department of Space (DoS) in the 1970s under the Prime Minister of India.^[12][13]

ISRO joined the Interkosmos program to launch its first satellite, Aryabhata, from the former Soviet Union in 1975.^[14]

SLV-3, a locally developed space rocket, was introduced in 1979, enabling India to undertake orbital launches.^[15] Experience gained from SLV-3 was used to develop an Augmented Satellite Launch Vehicle to develop technologies for launching satellites in geostationary orbit, but this ended up having very limited success and was eventually discontinued.^[16] However, the study of a homegrown medium-lift launch vehicle went on, which lead to the realisation of the Polar Satellite Launch Vehicle (PSLV).^[17]

Introduction of PSLV and commercial space missions

Antrix Corporation was set up in 1992 to market ISRO's technology, launch services and transfer technology to Indian private firms, dawning the commercial space sector in India.^[18] The PSLV rocket, introduced in 1993, enabled India to launch its polar satellites. Despite initial failures in its first two flights, PSLV had no further failures and emerged as ISRO's primary workhorse for launching domestic and foreign satellites.^[19][20] The development of GSLV and GSLV Mk III subsequently began in the 1990s and 2000s to attain the capability to launch communication satellites. However, the launchers didn't become operational until decades later, as India initially faced a great problem in the development of cryogenic engines.^[21][22][23] Later, NewSpace India Limited (NSIL) replaced Antrix as the commercial arm of ISRO.^[24]

Emergence of the private sector

The Indian space program emerged as an economic sector with government-backed investments with official institutions in the military and civilian administrations over decades of engineering. Over four decades, ISRO continued transferring technologies to small and medium enterprises (SMEs), leading to there being over 500 suppliers of various components in 2017.^[25]

India's IT industry started engaging in this sector in the 1990s. The Department of Space actively promoted the growth of the sector, leading to the establishment of the manufacturing of various systems. Large mapping projects for various civilian and military requirements were outsourced by the government, which drove the growth of India's private space sector. However, the private sector still played a supporting role, while the government continued to dominate the space sector.^[26]

In the late 2010s, a large number of startups started to emerge throughout the country with their own proposals and concepts to develop various satellite technologies and rockets.^[27][28][29]

A range of initiatives to deregulate the private space sector were introduced by Narendra Modi's cabinet in June 2020, and the Indian National Space Promotion and Authorisation Centre (INSPACe) was established for incubating technology into private firms, known as Non-Government Private Entities (NGPEs) by DOS.^[30][31] NGPEs were included as a crucial part of ISRO's Space Communication Policy draft issued in October 2020.^[32] As of 2021, a new Space Activities Bill and a space policy are being drafted by NALSAR Centre for Aerospace and Defence laws to regulate space manufacturing and the legal aspects of the industry in India.^[33][34]

An amendment was made in the FDI policy for space sector through a gazette notification dated April 16, 2024, called the Foreign Exchange Management (Non-debt Instruments) (Third Amendment) Rules, 2024.The liberalized entry routes under the amended policy are aimed at attracting potential investors in the Indian companies in space. As per them, up to 74 per cent FDI for satellite manufacturing & operation, satellite data products and ground segment & user segment are allowed under automatic route. Beyond 74 per cent these activities are under government route.FDI up to 49 per cent is allowed for Launch Vehicles and associated systems or subsystems, Creation of Spaceports for launching and receiving Spacecraft are under automatic route but beyond 49 per cent government permission would be required.The cabinet on February 21 had allowed 74% foreign direct investment (FDI) under automatic route for satellite manufacturing, upto 49% under automatic route for launch vehicles, and upto 100% under automatic route for manufacturing of components and systems.

The new rules will come into effect from April 16 2024^[35][36][37]

Throughout this time, various nondisclosure agreements and tech transfers have been taking place between ISRO and private entities.^[38][39]