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.

With the amendment of the FDI policy, the satellite sub-sector has been divided into three different activities with defined limits for foreign investment in each such sector.

As per the existing FDI policy, FDI is permitted in the establishment and operation of satellites through the government approval route only.

In line with the vision and strategy under the Indian Space Policy 2023, the Union Cabinet has eased the FDI policy for the space sector by prescribing liberalised FDI thresholds for various sub-sectors, the government says.

The proposed reforms seek to liberalise the FDI policy provisions in the space sector by prescribing a liberalised entry route and providing clarity for FDI in satellites, launch vehicles and associated systems or subsystems, creation of spaceports for launching and receiving spacecraft and manufacturing of space-related components and systems.

The entry route for the various activities under the amended policy are as follows:

1. Up to 74% under automatic route: Satellites-manufacturing & operation, satellite data products and ground segment & user segment. Beyond 74% FDI, these activities are under the government route.

2. Up to 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.

Up to 100% under automatic route: Manufacturing of components and systems/ sub-systems for satellites, ground segment and user segment.

This increased private sector participation would help to generate employment, enable modern technology absorption and make the sector self-reliant, the ministry of commerce and industry says in a statement.

“It is expected to integrate Indian companies into global value chains. With this, companies will be able to set up their manufacturing facilities within the country duly encouraging 'Make In India' and 'Atmanirbhar Bharat' initiatives of the Government,” it says.

The Department of Space consulted with internal stakeholders like IN-SPACe, ISRO and NSIL as well as several industrial stakeholders. NGEs have developed capabilities and expertise in the areas of satellites and launch vehicles. With increased investment, they would be able to achieve sophistication of products, global scale of operations and enhanced share of the global space economy.

The Indian Space Policy 2023 was notified as an overarching, composite and dynamic framework to implement the vision for unlocking India’s potential in the space sector through enhanced private participation, the government says.

The 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.

The FDI policy reform will enhance the Ease of Doing Business in the country, leading to greater FDI inflows and thereby contributing to growth of investment, income and employment, the commerce ministry says.

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