The Department for Promotion of Industry and Internal Trade (DPIIT) has notified changes in the foreign direct investment (FDI) norms in the space sector, allowing up to 100% overseas investment in some activities. This is expected to attract foreign players and private companies into the segment, which has been largely dominated by the government so far.
The new FDI policy on space sector was approved by the Union Cabinet on February 21, 2024, and has come into effect from March 6, 2024. The policy has divided the satellite sub-sector into three different activities with defined limits for foreign investment in each such sector.
According to the policy, up to 74% FDI is allowed under automatic route in satellite manufacturing and operation, satellite data products, and ground and user segments. Beyond this limit, government approval will be required in these areas for FDI. These activities include end-to-end manufacturing and supply of satellite and/or payload, establishing the satellite systems including control of in-orbit operations of the satellite & payloads, reception, generation or dissemination of earth observation/remote sensing satellite data and data products including Application Interfaces (API), and supply of satellite transmit/receive earth stations including earth observation data receive station, gateway, teleports, satellite Telemetry, Tracking and Command (TTC) station, Satellite Control Centre (SCC), etc.
The policy also allows up to 49% FDI under automatic route for launch vehicles and associated systems or subsystems, and creation of spaceports for launching and receiving spacecraft. Beyond 49%, FDI in these activities would require government approval. These activities include a vehicle and its stages or components that is designed to operate in or place spacecraft with payloads or persons, in a suborbital trajectory, earth orbit or outer space, and a spaceport (also referred as launch site) that can be regarded as the base from which spacecraft are launched, and consisting of facilities involving devices for transportation to, from and via outer space.
Further, up to 100% overseas investments are permitted under the automatic route for manufacturing of components and systems/sub-systems for satellites, ground segment and user segment. This comprises the manufacturing and supply of the electrical, electronic and mechanical components systems/ subsystems for satellites, ground segment and user segment.
The investee entity shall be subject to sectoral guidelines as issued by the Department of Space from time to time. The definitions of various terms used in the policy are also provided in the press note issued by the DPIIT.
The new FDI norms are expected to boost the participation of private players in the space sector, which has been witnessing rapid growth and innovation in recent years. The government has also established Indian National Space Promotion and Authorisation Centre (IN-SPACe) as an independent nodal agency under Department of Space (DOS) for permitting and regulating the activities of private sector in space domain.
The new FDI policy on space sector is likely to create more opportunities for collaboration, investment and technology transfer between Indian and foreign entities in the space domain. It may also help India achieve its ambitious goals of launching manned missions, reusable launch vehicles, interplanetary probes and other cutting-edge space technologies.
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