India's Space Sector Just Got A Major Upgrade With New Liberalised FDI Policy: Here's All You Need To Know

In a big push for ease of doing business in the space sector, the Prime Minister Narendra Modi-led Union Cabinet on Wednesday (21 February) approved a significant amendment in Foreign Direct Investment (FDI) policy on space sector.

This amendment aims to attract more foreign investment by simplifying the investment process across various segments of the space industry.

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Now, the satellites sub-sector has been divided into three different activities with defined limits for foreign investment in each such sector.

This change is part of the broader Indian Space Policy 2023, which seeks to increase private participation and make India a significant player in the global space economy.

Earlier, FDI in the establishment and operation of satellites was only permitted through the government approval route.

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

The revised policy introduces more liberal FDI thresholds for different space-related activities, aiming to streamline the investment process and encourage foreign capital inflow.

According to a Commerce Ministry release, the proposed reforms seek to liberalizse the FDI policy provisions in space sector by prescribing liberalised entry route and providing 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.

Under the new policy, the space sector is open to 100 per cent FDI, with specific provisions for different activities:

• Up to 74 per cent FDI is permitted under the automatic route for satellite manufacturing and operations, satellite data products, and ground and user segments. Investments beyond this threshold require government approval.

• For launch vehicles, associated systems, and the creation of spaceports, up to 49 per cent FDI is allowed under the automatic route, with higher investments also requiring government approval.

• Manufacturing of components and systems/sub-systems for satellites, ground segment, and user segment is open to 100 per cent FDI under the automatic route.

This increased private sector participation would help to generate employment, enable modern technology absorption and make the sector self-reliant, the Commerce Ministry said, adding that it is expected to integrate Indian companies into global value chains.

With this, companies will be able to set up their manufacturing facilities within the country duly encouraging 'Make In India (MII)' and 'Atmanirbhar Bharat' initiatives of the Government, the ministry said.

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