New norms liberalize foreign investments in space biz

The government has notified amendments to the foreign direct investment policy in the space sector to attract offshore investors in satellite manufacturing and satellite launch vehicles segments.

Amendment made in the FDI policy for space sector through a gazette notification dated 16 April 2024, prescribes liberalized entry route and provides 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.

“These rules may be called the Foreign Exchange Management (Non-debt Instruments) (Third Amendment) Rules, 2024,” the gazette notification said. The liberalized entry routes under the amended policy are aimed at attracting potential investors in the Indian companies in space.

The Union Cabinet earlier this year gave approval to these amendments.

The notification comes days ahead of the scheduled visit of Tesla CEO Elon Musk who is expected to meet with various Indian space companies during his visit from 21 to 22 April.

Concurrently, approvals for Musk’s satellite internet project, Starlink, are nearing finalization.

As per the notification, up to 74% FDI for satellite manufacturing & operation, satellite data products and ground segment & user segment are allowed under automatic route. Beyond 74% these activities are under government route.

FDI up to 49% is allowed for Launch Vehicles and associated systems or subsystems, Creation of Spaceports for launching and receiving Spacecraft are under automatic route but beyond 49% government permission would be required.

Besides, 100% FDI allowed for manufacturing of components and systems/ sub-systems for satellites, ground segment and user segment without government permission.

As per the earlier norms, FDI was permitted in establishment and operation of Satellites through the government approval route only.