Cabinet approves FDI amendment in space: Why it’s going to liberalise the sector

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In a big decision that promises to propel India into the next era of space exploration and commercialisation, the Union Cabinet led by Prime Minister Narendra Modi approved a significant amendment in the Foreign Direct Investment (FDI) policy concerning the space sector. 

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This move is set to revolutionise the Indian space industry by opening up new avenues for foreign investment and participation, thereby accelerating the nation’s India;s towards becoming a global space powerhouse.

The amendment comes as part of the Indian Space Policy 2023, a comprehensive and dynamic framework designed to unlock India’s potential in the space sector through enhanced private participation. 

The policy outlines a vision to augment space capabilities, develop a thriving commercial presence in space, leverage space technology for development, and foster international relations. It aims to create an ecosystem conducive to the effective implementation of space applications across various stakeholders.

WHY IT’S A BIG DEAL

Previously, FDI in the establishment and operation of satellites was permitted only through the government approval route. However, in alignment with the ambitious goals set forth in the Indian Space Policy 2023, the Cabinet has now liberalised the FDI thresholds for different sub-sectors and activities within the space domain. 

This strategic move is expected to attract substantial foreign investment, fostering innovation and growth in the sector.

The Department of Space, in consultation with internal stakeholders such as IN-SPACe, ISRO, NSIL, and several industrial stakeholders, has recognised the burgeoning capabilities and expertise of New Generation Enterprises (NGEs) in satellite and launch vehicle technologies. 

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By facilitating increased investment, these enterprises are set to achieve product sophistication, global scale operations, and a larger share of the global space economy.

“The liberal FDI limits by automatic route for end-to-end satellite manufacturing & operation, components and systems/ sub-systems for satellites, satellite data products and ground segment & 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,” Lt. Gen. AK Bhatt (Retd.), Director General, Indian Space Association (ISpA) said. 

ALL THAT’S NEW IN THE POLICY

The reformed FDI policy provisions specifically target the liberalisation of entry routes and provide clear guidelines for foreign investment in satellites, launch vehicles, spaceports, and the manufacturing of space-related components and systems. 

Under the amended policy, 100% FDI is now allowed in the space sector, with varying degrees of automatic and government approval routes for different activities. This includes up to 74% under the Automatic route for satellite manufacturing and operation, and up to 49% for launch vehicles and spaceport creation, among others.

This groundbreaking policy amendment is expected to usher in a new era of innovation, employment generation, and technology absorption within the Indian space sector. 

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By encouraging private sector participation and integrating Indian companies into global value chains, the amendment aligns with the Government‘s ‘Make In India’ and ‘Atmanirbhar Bharat’ push, aiming to make the sector self-reliant and a significant player on the international stage.