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Cabinet approves amendment in FDI policy on Space Sector

  • Category
    Polity & Governance
  • Published
    23rd Feb, 2024

Context

The Union Cabinet approved the amendment in Foreign Direct Investment (FDI) policy on space sector.  Now, the satellites sub-sector has been divided into three different activities with defined limits for foreign investment in each such sector.

How Indian Space Policy 2023 focused on enhancing private partnership?

  • The Indian Space Policy 2023 was notified as an overarching, composite and dynamic framework to implement the vision for unlocking India’s potential in Space sector through enhanced private participation.
  • The said policy aims to:
    • augment space capabilities
    • develop a flourishing commercial presence in space
    • use space as a driver of technology development and derived benefits in allied areas
    • pursue international relations and create an ecosystem for effective implementation of space applications among all stakeholders

What are the recent changes made in the FDI Policy?

  • As per the existing FDI policy, FDI is permitted in establishment and operation of Satellites 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 liberalized FDI thresholds for various sub-sectors/activities.
  • Under the amended FDI policy, 100% FDI is allowed in space sector. The liberalized entry routes under the amended policy are aimed to attract potential investors to invest in Indian companies in space.
  • The entry route for the various activities under the amended policy are as follows:
    1. Upto 74% under Automatic route: Satellites-Manufacturing & Operation, Satellite Data Products and Ground Segment & User Segment. Beyond 74% these activities are under government route.
    2. Upto 49% under Automatic route: Launch Vehicles and associated systems or subsystems, Creation of Spaceports for launching and receiving Spacecraft. Beyond 49% these activities are under government route.
    3. Upto 100% under Automatic route: Manufacturing of components and systems/ sub-systems for satellites, ground segment and user segment.

What are the benefits of this amendment?

  • Multiple benefits: This increased private sector participation would help to
    • generate employment
    • enable modern technology absorption
  • Integration into global chain: It is expected to integrate Indian companies into global value chains.
  • Self-reliant sector: 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.
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