The proposed reforms in the space sector aim to liberalise FDI policy by allowing 100% FDI through a more open entry route. The amendment clarifies on FDI in satellites, launch vehicles, associated systems, spaceports for spacecraft launch and reception, as well as the manufacturing of space-related components and systems..
IndianBureaucracy, New Delhi, February 22, 2024: Prime Minister Shri Narendra Modi, heading the Union Cabinet, has given approval for the amendment in the Foreign Direct Investment (FDI) policy concerning the space sector. The satellites sub-sector is now segmented into three distinct activities, each with specified limits for foreign investment.
The 2023 Indian Space Policy aims to boost India’s space sector through increased private participation. It focuses on enhancing space capabilities, fostering commercial presence, driving technology development, fostering international relations, and creating an effective ecosystem for space applications.
Under the current FDI policy, approval from the government is required for foreign investment in the establishment and operation of satellites. The Union Cabinet has relaxed the FDI policy for the Space sector, aligning with the Indian Space Policy 2023. This involves setting more lenient FDI thresholds for various sub-sectors and activities.
To formulate this decision, the Department of Space collaborated with internal stakeholders such as IN-SPACe, ISRO, NSIL, and industrial participants. Notably, Non-Governmental Entities (NGEs) have developed significant capabilities in satellite and launch vehicle domains. Increased investment is expected to enhance their product sophistication, global operational scale, and overall share in the global space economy.
Under the amended FDI policy, 100% FDI is allowed in space sector. The liberalized entry routes under the amended policy are aimed to attract potential investors to invest in Indian companies in space.
The entry route for the various activities under the amended policy are as follows:
- Upto 74% under Automatic route: Satellites-Manufacturing & Operation, Satellite Data Products and Ground Segment & User Segment. Beyond 74% these activities are under government route.
- Upto 49% under Automatic route: Launch Vehicles and associated systems or subsystems, Creation of Spaceports for launching and receiving Spacecraft. Beyond 49% these activities are under government route.
- Upto 100% under Automatic route: Manufacturing of components and systems/ sub-systems for satellites, ground segment and user segment.
This increased private sector participation would help to generate employment, enable modern technology absorption and make the sector self-reliant. It is expected to integrate Indian companies into global value chains. With this, more global companies will be able to set up their manufacturing facilities within the country under the existing Make In India and Atmanirbhar Bharat initiatives.
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