CNBC's Inside India newsletter: Elon Musk's Starlink gets access to India, but its success rests on two billionaires

Elon Musk has been working relentlessly to break into India's lucrative market, a point he stressed during his meeting with Prime Minister Narendra Modi in Washington, D.C., last month, as CNBC confirmed.

In that meeting, Musk reiterated to Modi the benefits of widening internet access across the world's most populous country, according to sources in the room. Musk's pitch appears to have worked, with SpaceX announcing deals with the two dominant players in Indian telecom – Reliance's Jio and Airtel – that will roll out Starlink internet services across India.

Musk has spoken to Modi about space and satellites before. Why was India more receptive this time around?

Sources close to New Delhi say Musk's influential role in the White House no doubt incentivized the Indian government to reevaluate a Starlink deal.

As we reported last week, trade talks between U.S. and Indian officials have not resulted in a breakthrough, with Trump saying the U.S. will charge India reciprocal tariffs starting April 2, according to domestic media.

While India and the U.S. remain in trade talks, the two Starlink deals are seen as a huge win for Musk.

The world's richest person will finally get access to an incredibly important, mobile-savvy consumer market that he has been vying for years.

Plus, Musk gets to partner rather than compete with Reliance's Jio and Bharti Airtel, which together dominate India's booming telecom market. It also offers Musk the unique opportunity to work with the heads of rival telecom majors and powerful Indian billionaires: Mukesh Ambani and Sunil Mittal. The two are highly respected and influential tycoons.

"Space, defense and India are basically the biggest opportunities for any company in the world right now. Musk gets all three … at the same time it adds a whole new dimension to American force projection in the most contested region in the world," said Eliot Pence, former head of international at Anduril, a defense technology company, to CNBC over the phone.

Possible 'new dawn' for U.S. companies in India

One of the biggest challenges for foreign companies breaking into India has been protectionist policies, stiff competition from local competitors and an inability to penetrate India as an outsider. U.S. companies including Meta, Walmart and Amazon have had their share of challenges on the ground.

"India has been historically a very challenging market for U.S. companies, but this might be a new dawn," added Pence.

The opportunity is large. Having recently traveled across different parts of India a few months ago, I was surprised by the limited access to internet in smaller towns.

Starlink, which uses low earth orbit satellites, may prove useful in non-urban areas and less-populated parts of the country where internet access remains patchy. 

"[Starlink] should provide a great boost … particularly in rural and remote areas of India, where traditional telecom networks don't do especially well," said Pravin Krishna, professor of international economics at Johns Hopkins University, to CNBC over the phone.

Counterpoint Research's Neil Shah explained that Starlink can offer internet in rural India where Jio and Airtel do not have connectivity, and it is costly to build telecom infrastructure. Jio and Airtel will then acquire local customers on behalf of Starlink, selling the equipment needed to run high-speed internet.

Connectivity might be choppy

But challenges await.

To officially enter India, Starlink still needs to get past several regulatory hurdles and acquire a communications license which the Indian government is currently reviewing.

While a partnership with Ambani and Mittal sounds promising, the mechanics behind the Starlink deal have raised several questions.

For one, will both Jio and Airtel abandon initial plans made with European companies to introduce satellite internet services in India? Last year, Reliance's internet arm Jio unveiled a joint venture with SES, a firm based in Luxembourg, to operate satellites in India. Airtel has an existing alliance with Eutelsat OneWeb.

Starlink will need to navigate technical challenges, such as limiting interference as satellites generally require line-of-sight and can more easily be impacted by weather disturbances, according to analysts at Citi.

"We reckon satellite networks would be more suited for servicing remote rural areas where there are coverage gaps rather than high-density urban areas where satellites may not be able to match terrestrial networks in terms of capacity and coverage," the Citi analysts said.

Starlink will also need to make its service more affordable in a price-sensitive market such as India, especially if the opportunity lies in rural areas where incomes are often lower.

"While there is an opportunity to connect a lot of people to the internet, pricing will challenge Starlink's ability to scale," said Shah to CNBC over the phone.

Starlink's service currently costs around $110 per month for users in the U.S. Jio's cheapest WiFi package for individuals in India costs less than that in a year.

Industry experts say that's where local governments will be under pressure to provide incentives and subsidies to make broadband access more affordable. This is also where Musk's new Indian billionaire friends could provide much-needed guidance.

Musk's ties to President Trump may have given Starlink the green light to enter India, but the satellite space company's success rests on its two powerful Indian partners, and the price it settles on.

The venture capital market in India is resurging. Total investments in the country's startup scene hit $13.7 billion in 2024, a 40% increase from the previous year, according to a report by Bain & Company. The number of deals rose 45% to 1,270 in 2024, compared with 880 a year earlier. That makes India second-largest market for VCs in Asia-Pacific. The consumer technology sector attracted the most investment, even as traditional ones like banking and retail experienced rapid growth.

Amazon is reportedly planning to list its Indian unit. The U.S. e-commerce giant has begun talks with JPMorgan and investment banks in India, according to sources that spoke to YourStory, an Indian publication covering startups. Spinning off its Indian unit will allow Amazon to maintain an inventory in the country rather than simply act as an intermediary between buyers and sellers.

India and New Zealand to begin free trade agreement negotiations. At the India-New Zealand economic forum in New Delhi on Tuesday, New Zealand's Prime Minister Christopher Luxon said he is open to strengthening economic ties with India and looks forward to signing a trade deal within 60 days. Trade between the two countries is currently valued at $1.75 billion and can multiply 10 times in the next 20 to 25 years, predicted Indian Minister of Commerce and Industry Piyush Goyal.

India and Malaysia look to expand bilateral economic ties. The South Asian nation's Minister of State for Commerce & Industry and Electronics & Information Technology Jitin Prasada met Malaysian Deputy Minister of Investment, Trade, and Industry Liew Chin Tong in New Delhi on Tuesday. At their meeting, the trade and commerce ministers discussed opportunities to deepen cooperation in semiconductor manufacturing as well as increase bilateral trade.

Wholesale prices in India fall. February's wholesale price index came in at 2.38%, ticking up from the 2.31% in January, according to Indian government data released Monday. A 33.59% spike in vegetable oil prices contributed to the reacceleration of wholesale prices. The country's consumer price index, which came out March 12, reported a 3.61% rise in February.

Indian stocks were in positive territory for four straight sessions in the week, with the Nifty 50 index rising 0.68% as at 12 p.m. local time.

The benchmark 10-year Indian government bond yield edged up slightly to 6.7443%.

On CNBC TV this week, Adrian Zuercher of UBS Global Wealth Management said that India remains "one of the best structural stories in Asia." That's despite the country's economic growth being "muted" and the stock market having a potentially challenging year in 2025 because of investors taking profit and reallocating capital to China. Indian stocks are now priced more reasonably and "offer more upside" for investors, Zuercher added.

Meanwhile in a separate interview, Vikas Pershad from M&G Investments reinforced Zuercher's opinion, saying that the firm is still "very constructive on India." Large-cap Indian stocks have done well not just in terms of price but also in "execution," which signals that the country's long-term growth story is "very much intact," Pershad said. While acknowledging that India's economic growth might not expand as much as previously expected, Pershad said that it is still "much higher than anywhere else in the world."

Monday sees a slew of releases for the purchasing managers' index of various countries, giving investors insight into how factory and services activities are holding up amid global trade turmoil.

March 21: Japan inflation rate for February

March 24: India HSBC PMI flash for March, U.S. S&P PMI for March, eurozone HCOB PMI flash for March, U.K. S&P Global PMI for March, Japan Jibun PMI flash for March

March 25: U.S. Consumer Board consumer confidence for March

March 26: U.K. inflation rate for February

March 27: U.S. fourth-quarter GDP, final figures