Amendment in FDI Policy for Space Sector: What You Need to Know?

In a significant move aimed at bolstering India's position in the global space arena, the Union Cabinet, under the leadership of Prime Minister Narendra Modi, has approved an amendment in the Foreign Direct Investment (FDI) policy concerning the space sector. The decision reflects the government's commitment to realizing the vision of an Atmanirbhar Bharat, as outlined by Prime Minister Modi.

Charting new orbits for growth and innovation!

Our government has updated the FDI policy in the space sector, paving the way for a galaxy of opportunities. https://t.co/XHyGy5iLAs https://t.co/0jGDwW3RiB

— Narendra Modi (@narendramodi) February 22, 2024

Liberalization of Space Sector for Foreign Investment

Under the newly approved policy, the space sector has been opened up for foreign direct investment in prescribed sub-sectors and activities. This will bring in more possibilities for space startups. This strategic shift in policy is anticipated to enhance the ease of doing business in the country, attract greater FDI inflows, and consequently, foster growth in investment, income, and employment opportunities.

The amendment marks a departure from the previous FDI regulations, particularly in the satellites sub-sector, which has now been restructured into three distinct activities, each with defined limits for foreign investment.

Indian Space Policy 2023: A Blueprint for Transformation

Integral to this policy reform is the Indian Space Policy 2023, a comprehensive framework designed to unlock India's potential in the space sector through heightened private participation. The policy aims to bolster space capabilities, foster a robust commercial presence, leverage space technology for broader technological advancements, cultivate international partnerships, and establish an ecosystem conducive to effective space application implementation.

Consultative Process and Stakeholder Engagement

The formulation of this policy amendment involved extensive consultations with various stakeholders, including IN-SPACe, ISRO, NSIL, and industrial partners. Notably, Non-Governmental Entities (NGEs) have been identified as key players possessing the requisite capabilities and expertise in satellite and launch vehicle domains. Increased investment opportunities are expected to enable NGEs to achieve product sophistication, global scalability, and a larger share of the global space economy.

Key Reforms in FDI

The amended FDI policy introduces liberalized entry routes and offers clarity on FDI in several critical areas within the space sector:

• Satellites: Manufacturing & Operation, Satellite Data Products, Ground Segment & User Segment - Up to 74% FDI allowed under the Automatic route.
• Launch Vehicles and associated systems or subsystems, Creation of Spaceports: Up to 49% FDI permitted under the Automatic route.
• Manufacturing of components and systems/sub-systems for satellites, ground segment, and user segment: Up to 100% FDI allowed under the Automatic route.

Anticipated Benefits and Outlook

The enhanced private sector participation is poised to yield manifold benefits, including job creation, technology absorption, and self-reliance in the space sector. By integrating Indian companies into global value chains, the policy amendment aligns with the 'Make In India' and 'Atmanirbhar Bharat' initiatives of the Government, encouraging domestic manufacturing and fostering innovation.

The Union Cabinet's approval of the amendment in the FDI policy represents a significant milestone in India's journey towards achieving self-reliance and global competitiveness in the space sector. The move underscores the government's unwavering commitment to fostering innovation, entrepreneurship, and sustainable growth across strategic industries.

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