Amendment regarding Foreign Direct Investment (“FDI”) in Space Sector

India approves 100% FDI in Space Sector

The Government of India (“GoI”), on March 04, 2024 has announced significant amendment in the Consolidation FDI Policy, 2020 (“FDI Policy”) pertaining to the space sector, which will be effective from the date of FEMA notification. The amendment has been brought with an objective to liberalize the space sector and promote foreign investment in the Indian space economy.

As on today, the FDI policy allows 100% FDI subject to government approval in establishment and operation of satellites, subject to the sectoral guidelines of Department of Space/ISRO.

Amendments under Article 5.2.12

Vide the press note dated March 04, 2024 issued by Department for Promotion of Industry and Internal Trade, GoI has introduced the following amendments under Article 5.2.12 of the FDI Policy:

1.For manufacturing and operation of satellites, the sector cap for FDI has been set at 100%, wherein upto 74% FDI can be made through automatic route and FDI beyond 74% would require government approval;

2.Satellite data products, ground segment and user segment can have 100% FDI through automatic route;

3.Launch vehicle and associated systems or sub-systems can have 100% FDI, wherein, upto 49% FDI can be made through automatic route and FDI beyond 49% would require government approval;

4.For creation of spacesports for launching and receiving spacecraft, 100% FDI can be made through automatic route; and

5.Manufacturing of components and systems/sub-systems for satellites, ground segment and user segment, can have 100% FDI through automatic route.

Conclusion

Further, the press note sets out definitions of each activity mentioned above which are exclusive in nature, with an intention to avoid any uncertainty going forward.

The amendment is aligned with GoI’s vision to increase the space economy of India five-fold in the next 10 years, to touch $40 billion. By liberalizing the space sector, the foreign investors will find the Indian space sector to be a lucrative opportunity which would lead to immense technological growth in the sector.

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