The Union Cabinet has approved the amendment in the foreign direct investment (FDI) policy for the space sector. With the amendment, the satellite sub-sector has been divided into three different activities with defined limits for foreign investment in each such sector.

The Indian Space Policy 2023 was 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 said policy aims to augment space capabilities; develop a flourishing commercial presence in space; use space as a driver of technology development and derived benefits in allied areas; pursue international relations and create an ecosystem for effective implementation of space applications among all stakeholders.

The Department of Space held consultations with internal stakeholders including the Indian National Space Promotion and Authorisation Centre (IN-SPACe), the Indian Space Research Organisation (ISRO), and NewSpace India Limited (NSIL) as well as several industrial stakeholders. Non-governmental entities (NGEs) have developed capabilities and expertise in the areas of satellites and launch vehicles. With increased investment, they would be able to achieve sophistication of products, global scale of operations and enhanced share of the global space economy.

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 government has eased the FDI policy on the space sector by prescribing liberalised FDI thresholds for various sub-sectors/activities.

The proposed reforms seek to liberalise the FDI policy provisions in the space sector by prescribing liberalised 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.

Under the amended FDI policy, 100 per cent FDI is allowed in the space sector. The liberalised entry routes under the amended policy are aimed at attracting potential investors to invest in Indian companies in space.

The entry routes for the various activities under the amended policy are as follows:

  • Up to 74 per cent under automatic route: Satellites-manufacturing and operation, satellite data products and ground segment and user segment. Beyond 74 per cent, these activities are under the government route.
  • Up to 49 per cent under automatic route: Launch vehicles and associated systems or subsystems, creation of spaceports for launching and receiving spacecraft. Beyond 49 per cent, these activities are under the government route.
  • Up to 100 per cent under automatic route: Manufacturing of components and systems/sub-systems for satellites, ground segment and user segment.

This increased private sector participation would help to 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 manufacturing facilities within the country duly encouraging Make In India and Atmanirbhar Bharat initiatives. 

Industry reactions:

Commenting on the amendment, Lt. Gen. AK Bhatt (Retd.), Director General, Indian Space Association (ISpA), said, “We are thankful to the government, and it is heartening to note the pace of its forward-looking reforms in the nascent space sector. After the pioneering initiative to administratively allocate satellite spectrum, today’s decision to allow a liberal FDI policy for space is yet another significant move forward. The liberal FDI limits by automatic route for end-to-end satellite manufacturing and operation, components and systems/sub-systems for satellites, satellite data products and ground segment and user segment, launch vehicles, creation of spaceports will boost the confidence of all space industry members, including the biggest global players in the space and satellite domain. This will give India, access to the latest tech advances and much-needed funds not only from the country but from international investors too. At current, the space sector in India accounts for little over about two per cent of the global space economy and this move will help the country to gain a much larger pie in the global market.”