Union cabinet has announced changes to the foreign direct investment (FDI) policy in the space sector to attract international investors in satellite manufacturing and launch vehicles.
The amendment, outlined in a gazette notification dated April 16, 2024, introduces a more accessible entry route and offers clarity on FDI regulations concerning satellites, launch vehicles, spaceports, and related components and systems.
"These rules may be called the Foreign Exchange Management (Non-debt Instruments) (Third Amendment) Rules, 2024," the gazette notification read.
The notification arrives before the anticipated visit of Tesla CEO Elon Musk to India on April 21. Musk is set to engage with several Indian space companies during his visit. Additionally, approvals for Musk's satellite internet project, Starlink, are nearing completion concurrently.
The notification states that up to 74 per cent FDI is permitted for satellite manufacturing & operation, satellite data products, and ground segment & user segment through the automatic route. Beyond 74 per cent, government approval is needed for these activities.
For Launch Vehicles and associated systems or subsystems, and the creation of Spaceports, up to 49 per cent FDI is allowed via the automatic route, with government permission required for investments beyond this threshold.
A 100 per cent FDI is permitted for manufacturing components and systems/sub-systems for satellites, ground segment, and user segment without requiring government permission.
The amended policy aims to attract investors to Indian space companies. Earlier, FDI in satellite establishment and operation required government approval.
The Union Cabinet eased the FDI policy to align with the Indian Space Policy 2023, setting flexible thresholds for sub-sectors. Collaboration with stakeholders, including IN-SPACe, ISRO, NSIL, and industry players, also helped with the decision.
The Union Cabinet approved these amendments earlier this year.
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