The Union Cabinet has allowed 100% foreign direct investment (FDI) in the space sector in a bid to attract potential investors to invest in Indian space companies.
Under the amended FDI policy, the satellite sub-sector has been segmented into distinct activities, each with defined limits for foreign investment. Previously, FDI in satellite establishment and operation required government approval. However, the revised policy streamlines entry routes and relaxes restrictions, aligning with the vision outlined in the Indian Space Policy 2023.
According to the new policy framework, the following entry routes have been outlined:
1. Up to 74% under automatic route: This includes activities such as satellite manufacturing and operation, satellite data products, and ground segment and user segment. Beyond 74% FDI, government approval will be required.
2. Up to 49% under automatic route: This pertains to launch vehicles, associated systems or subsystems, and the creation of spaceports. Investments exceeding 49% will necessitate government approval.
3. Up to 100% under automatic route: Manufacturing of components and systems/sub-systems for satellites, ground segment, and user segment.
The Ministry of Commerce and Industry stated that, "The increased private sector involvement will stimulate job creation, facilitate technology transfer, and fortify India's position in the global space economy, It is anticipated that the policy reforms will incentivize companies to establish manufacturing facilities within the country, aligning with the government's 'Make In India' and 'Atmanirbhar Bharat' initiatives"
Consultations with key stakeholders, including IN-SPACe, ISRO, NSIL, and industrial entities, have informed the policy reforms.
The government acknowledges the existing capabilities of NewSpace India Limited (NSIL) and other non-governmental entities (NGEs) in satellite and launch vehicle technologies. With enhanced investment opportunities, these entities are set to expand their operations, enhance product sophistication, and capture a larger share of the global space market.
The Indian Space Policy 2023, serving as a comprehensive framework, aims to unlock India's space potential through enhanced private participation. It seeks to augment space capabilities, promote commercial ventures, drive technology development, and encourage international collaboration.
"The FDI policy reform is expected to enhance the Ease of Doing Business in India, attracting greater investment inflows and contributing to economic growth, income generation, and employment opportunities" asserted Ministry of Commerce and Industry.
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