In a notable initiative aimed at attracting foreign investment into the Indian space sector, the government has recently notified amended Foreign Direct Investment (FDI) norms. The revised guidelines pave the way for 100 percent overseas investment in the manufacturing of satellite components, 74 percent in satellite manufacturing and operations, and 49 percent in launch vehicles. Investments exceeding these limits will require government approval.
Amendments within the Consolidated FDI Policy
The modifications have been incorporated under Para 5.2.12 of the Consolidated FDI Policy Circular of 2020. The updated policy specifies sectoral caps and entry routes for various activities in the space sector as follows:
- Satellites – Manufacturing & Operation
- Sectoral Cap: 100%
- Up to 74%: Automatic route
- Beyond 74%: Government route
- Satellite Data Products
- Sectoral Cap: 100%
- Up to 74%: Automatic route
- Beyond 74%: Government route
- Ground Segment & User Segment
- Sectoral Cap: 100%
- Up to 74%: Automatic route
- Beyond 74%: Government route
- Launch Vehicles and Associated Systems or Subsystems
- Sectoral Cap: 100%
- Up to 49%: Automatic route
- Beyond 49%: Government route
- Creation of Spaceports for Launching and Receiving Spacecraft
- Sectoral Cap: 100%
- Up to 49%: Automatic route
- Beyond 49%: Government route
- Manufacturing of Components and Systems/Subsystems for Satellites, Ground Segment, and User Segment
- Sectoral Cap: 100%
- Up to 100%: Automatic route
The investee entity will be subject to sectoral guidelines issued by the Department of Space as and when required. The amended policy also provides precise definitions for various terms associated with the space sector, such as Satellites, Satellite data products, Ground Segment & User Segment, among others.
Background and Rationale
The decision to amend FDI norms in the space sector stems from a period of sluggish foreign investment in the country’s space industry over the past two years. By relaxing FDI norms, the government aims to attract increased foreign investment, encourage technological advancements, and propel the growth of the Indian space industry.