The Union Cabinet, through an amendment in the foreign direct investment policy for the space sector, permits 100% FDI in Indian Space Sector. This policy alteration aligns with Prime Minister Mr. Narendra Modi’s vision of achieving “Atmanirbhar Bharat” or a self-reliant India.
The liberalization of the Indian space sector now permits foreign direct investment in specified sub-sectors/activities. This reform in FDI is set to improve the ease of doing business within the country, paving the way for increased foreign direct investment inflows. Consequently, this will contribute to the growth of investment income and employment opportunities.
Pawan Goenka, leading the Indian space regulatory body IN-SPACe, hailed the Union Cabinet’s nod for 100% foreign direct investment (FDI) in the space sector as a “game-changing decision.” He is confident that this new Foreign Direct Investment Policy will propel India to unprecedented levels of success in the space industry.
100% FDI in Indian Space Sector
In India, Foreign Direct Investment (FDI) can enter the country through two routes: the Automatic route and the Approval route. The Automatic route entails more liberalized regulations, where foreign investors or Indian companies do not need prior approval from government bodies. They are only required to notify within 30 days after the investment.
On the other hand, the Approval route necessitates foreign investors or Indian companies to seek approval before making their investment. The entry routes for various activities under the amended policy are specified according to the new guidelines. The Indian Space sector is divided into three sub-categories, each governed by its respective FDI regulations.
(1) Upto 74% under Automatic Route:
Satellite manufacturing and operations, satellite data products, and ground segments, as well as the user segment, are permitted up to 74% under the automatic route. Beyond this threshold, approvals through the approval route are mandated for these activities.
(2) Upto 49% under Automatic Route:
Launch vehicles and associated systems or subsystems, as well as the creation of spaceports for launching and receiving spacecraft, are permitted up to 49% under the automatic route. However, for these activities beyond the 49% threshold, approval through the approval route is necessary.
(3) Upto 100% under Automatic Route:
The manufacturing of components and subsystems for satellites, ground segments, and user segments is allowed up to 100% under the automatic route.
The objective of the New Foreign Direct Investment Policy is to attract potential investors to invest in Indian companies. The 100% FDI in Indian Space Sector aims to enhance space capabilities, foster a robust commercial presence in space, leverage space as a catalyst for technology development, and derive associated benefits in allied areas.
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