100 % FDI in the space sector: India opens its doors to enhanced private participation

This move is set to revolutionize the Indian space by opening new avenues for and participation, thereby accelerating India’s journey towards becoming a global space powerhouse.

Aiming for a robust and inclusive space ecosystem

This amendment aims to create an ecosystem conducive to the effective implementation of space applications across various .

It outlines a vision to augment space capabilities, develop a robust commercial presence in space, leverage space technology for development, foster international relations, use space as a driver of technology development, and create an ecosystem for effective implementation of space applications among all stakeholders.

Benefits of Increased Private Participation

This amendment increased private sector participation would help 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 own manufacturing facilities within the country duly encouraging 'Make In India (MII)' and 'Atmanirbhar Bharat' initiatives of the Government.

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 on the Space sector by prescribing liberalized FDI thresholds for various sub-sectors/activities.

As per this amendment, the satellite sub-sector has been divided into three different activities with defined limits for foreign investment in each such sector. 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.

Liberalized FDI Thresholds for Various Sub-sectors

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 amendment has liberalized the FDI policy provisions in the space sector by prescribing liberalized entry routes 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.

Here are the entry routes for the various activities under the amended policy:

· Up to 74% under Automatic route: Satellites-Manufacturing & Operation, Satellite Data Products and Ground Segment & User Segment. Beyond 74% of these activities are under the government route.

· Up to 49% under Automatic route: Launch Vehicles and associated systems or subsystems, and the Creation of Spaceports for launching and receiving Spacecraft. Beyond 49% of these activities are under the government route.

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

FDI Policy Reform: A Catalyst for Growth

The Indian Space Policy 2023 is 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 FDI policy reform will enhance the ease of doing business in the country, leading to greater FDI inflows and thereby contributing to the growth of investments, income and employment. Nonetheless, it is one more step by India to fully become a developed & advanced country.

(The author is Whole Time Director, Arihant Capital)

(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)