Govt notifies liberalised FDI norms for space sector to boost foreign investment

The government has notified amendments to the foreign direct investment policy in the space sector to attract offshore investors in satellite manufacturing and satellite launch vehicles segments. Amendment made in the FDI policy for space sector through a gazette notification dated April 16, 2024, prescribes liberalized entry route and provides clarity for FDI in satellites, launch vehicles and associated systems or subsystems, creation of spaceports for launching and receiving Spacecraft and manufacturing of space-related components and systems.

"These rules may be called the Foreign Exchange Management (Non-debt Instruments) (Third Amendment) Rules, 2024," the gazette notification said.

The liberalized entry routes under the amended policy are aimed at attracting potential investors in the Indian companies in space.

The Union Cabinet earlier this year gave approval to these amendments.

The notification comes days ahead of the scheduled visit of Tesla CEO Elon Musk who is expected to meet with various Indian space companies during his visit from April 21 to 22.

Concurrently, approvals for Musk's satellite internet project, Starlink, are nearing finalization.

As per the notification, 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.

Besides, 100 per cent FDI allowed for manufacturing of components and systems/ sub-systems for satellites, ground segment and user segment without government permission.

As per the earlier norms, FDI was permitted in establishment and operation of Satellites through the government approval route only.

In line with the vision and strategy under the Indian Space Policy 2023, the Union Cabinet has eased the FDI policy in the Space sector by prescribing liberalized FDI thresholds for various sub-sectors/activities.

The Department of Space consulted with internal stakeholders like IN-SPACe, ISRO and NSIL as well as several industrial stakeholders. NGEs have developed capabilities and expertise in the areas of satellites and launch vehicles. With increased investment, they would be able to achieve sophistication of products, global scale of operations and enhanced share of the global space economy.