In a move aimed at bolstering India’s space sector, the government has announced the easing of Foreign Direct Investment (FDI) norms. The decision, taken at a Cabinet meeting chaired by Prime Minister Narendra Modi on Wednesday (February 21), aims to attract overseas players and private companies into the segment, according to an official statement.
Under the new regulations, the satellite sub-sector has been divided into three different activities, each with defined limits for foreign investment. Presently, FDI in the space sector is permitted up to 100 per cent in the area of satellite establishment and operations through the government route only.
However, the revised policy allows up to 74 per cent FDI under the automatic route in satellite manufacturing and operation, satellite data products, and ground and user segments. Beyond this limit, government approval will be required for FDI in these areas.
Moreover, up to 49 per cent FDI is permitted through the automatic route for launch vehicles and associated systems or subsystems, including the creation of spaceports for launching and receiving spacecraft. Any FDI beyond 49 per cent in these activities would necessitate government approval.
In a move to encourage manufacturing within the country, up to 100 per cent overseas investments are permitted under the automatic route for manufacturing components and systems/sub-systems for satellites, ground, and user segments.
Increase in private sector’s participation
This decision is expected to significantly increase private sector participation in the space sector, leading to the generation of employment opportunities, facilitating modern technology absorption, and making the sector self-reliant. It is anticipated that this move will also integrate Indian companies into global value chains.
The government aims to liberalise FDI policy provisions in the space sector by prescribing easy entry routes and providing clarity for overseas investments in satellites, launch vehicles, associated systems or subsystems, creation of spaceports, and manufacturing of space-related components and systems.
With these changes, companies will be empowered to set up their manufacturing facilities within the country, thereby encouraging the government’s Make In India initiatives. This move is poised to stimulate growth and innovation in India’s space sector, aligning with broader economic and industrial objectives.
(With inputs from PTI)