India (Commonwealth Union)_ India has taken a significant step towards opening up its space sector to foreign investment, with amendments to its foreign direct investment (FDI) policy announced on Wednesday. These changes are expected to facilitate greater inflows of foreign capital into areas such as satellite development, launch services, and the establishment of ground infrastructure to support these activities.
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The newly approved policy by the Union Cabinet allows for 100 percent FDI in the manufacturing of components, systems, or sub-systems for satellites, as well as ground and user segments. Meanwhile, 74 percent of FDI has been allowed for satellite manufacturing and operation, satellite data products, and associated ground and user segments. Beyond this threshold, approval from the government will be required.
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Furthermore, for the manufacture of launch vehicles, associated systems, and the establishment of spaceports, FDI up to 49 percent is permitted under the automatic route. Previously, FDI in satellite establishment and operation was only allowed through government approval. In alignment with the objectives outlined in the Indian Space Policy 2023, the Union Cabinet’s decision aims to streamline FDI regulations in the space sector, providing clear guidelines and liberalized thresholds for various activities within the industry.
According to the government, the proposed reforms are anticipated to liberalize FDI provisions, offering a more accessible entry route and clarifying investment opportunities in satellites, launch vehicles, associated systems, spaceports, and related manufacturing. This move is expected to enhance confidence within the space industry, attracting not only domestic but also international investors, including major global players.
The statement said, “The proposed reforms may liberalize the FDI policy provisions in the space sector by prescribing a liberalized entry route and providing clarity for FDI in satellites, launch vehicles, and associated systems or subsystems; the creation of spaceports for launching and receiving spacecraft; and the manufacturing of space-related components and systems”.
According to AK Bhatt, Director-General of the Indian Space Association (ISpA), these changes signify a significant advancement following the administrative allocation of satellite spectrum. The liberalized FDI limits across various segments of the space industry are poised to foster technological innovation and financial support, positioning India to play a more substantial role in the global space market.
The statement further added that the increased participation of the private sector is predicted to generate employment opportunities, facilitate technology transfer, and bolster self-reliance in the sector. It is also expected to integrate Indian companies into global supply chains, promoting initiatives such as ‘Make in India‘ and ‘Atmanirbhar Bharat’ spearheaded by the government.
It said, “This increased private sector participation would help to generate employment, enable modern technology absorption, and make the sector self-reliant. 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”.
