Foreign Investment

Amendment in FDI Policy of Space Sector

The Indian space economy is currently valued at approximately US $8.4 billion and is expected to reach US $44 billion by the end of 2033. The expected growth of 8% in the total global space economy emphasizes broadening the space vision outlined under the Space policies.

Earlier, there was no access to private participation and FDI injunction in the Indian Space industry. The policies and released press notes remarked a significant change in the space industry with time. After the amendment in the Indian space policy 2023, 100% FDI is permitted in sub-sectors and other space sector activities.

Background of FDI Policies in the Space Sector

Generally, the Indian space sector has been ruled by the ISRO, but now, major growth has been observed through diverse policies regulating the FDI in the Indian Space industry. The background of FDI policies in space sectors are as provided below:

1. FDI Policy Circular of 2020

The government of India introduced a transparent, predictable, and comprehensive policy framework on FDI in 2020. The Department for Promotion of Industry and Internal Trade and the Ministry of Commerce & Industry introduced this policy circular to attract and promote FDI for the economic growth and development of the different sectors.

The FDI policy circular permits the establishment and operation of satellites to receive Foreign Direct Investment under the Approval Route.

2. Indian Space Policy of 2023

The Union cabinet of the government of India formulated an overarching composite and dynamic framework to ease the FDI policy in the space sector. Promoting FDI in the space sector is secured by prescribing liberalized entry routes and providing clarity for FDI.

Recent Amendments in FDI Policy of Space Sector

Later, on 21^st February 2024, the Union Cabinet amended the consolidated FDI Policy Circular to review the extant FDI policy of the space sector. The amendment divided the space sector into sub-sectors, carrying out three different activities defining foreign investment limits.

The press note now permits 100% FDI in various space sector activities. The amendments observed in the FDI Policy of Space Sector provide for the following:

1. Satellite Activities

The amended space policy of 2024 provides for the FDI entry routes for carrying out satellite activities.  

Sector/Activities	FDI Limit	Entry Routes
Satellite Manufacturing and operation; Satellite data products; and Satellite ground and user segment	Up to 74%	Automatic Route
Satellite Manufacturing and operation; Satellite data products; and Satellite ground and user segment	Beyond 74%	Government Route

2. Launch Vehicles & Spaceports

The FDI entry routes for launch vehicles and spaceport activities are provided under the amended space policy 2024. The following is the list of routes for FDI:

Sector/Activities	FDI Limit	Entry Routes
Launch vehicles and Associated Systems and Subsystems; Creation of Spaceports for launching and receiving Spaceports	Up to 49%	Automatic Route
Launch vehicles and Associated Systems and Subsystems; Creation of Spaceports for launching and receiving Spaceports	Beyond 49%	Government Route

3. Manufacturing Components & Systems

The amended space policy of 2024 ensures 100% FDI via the automatic route for the manufacturing of components, systems, and subsystems for satellites, ground, and user segments.

Benefits of Amendment in FDI Policy of Space Sector

The amendments made to the FDI policy of the space sector benefit the industries carrying out their business activities in association with this sector. The following are the benefits of the amendment in the FDI policy of the space sector.

1. Foreign & Private Participation

Generally, the amendment in the FDI policy of the space sector is a way to boost India’s space sector for foreign and private participation. The amendments made in the space sector simplified the regulatory framework to attract foreign and private investors with ease of doing business.

2. Liberalized Entry Routes

The amendment in the FDI policy of space sectors introduced various liberalized entry routes to attract potential investors to invest in the Indian space sector.

3. Employment Generation

The rise in private-sector participation has led to employment generation and easy access to technological developments.

4. Easy Access to Bug Funds

After the amendment of 2024, big funds are easily available to the satellite sector in the international market at a lower and more reasonable cost.

5. International Collaboration

After the amendment of 2024, the Indian space sector has undergone various international collaborations and tie-ups with the latest and advanced technological developments.

6. Categorization of Space Industry

The amended FDI policy of space sector detailed various categories of business activities in the space industry. Also, the policy provided separate FDI limits and routes for every space activity followed in the industry.

Conclusion

The amendment to the FDI Policy in the space sector is a significant milestone in Indian space history. The government’s amendments to the Indian space sector ensured the transformation of the space industry to an innovative, collaborative, and competitive business economy. The amendment fosters a conducive and tech-developed environment for investment opportunities in the space sector.

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