Centre Notifies New FDI Rules for Space Sector in Anticipation of Elon Musk’s Visit

An amendment to the FDI policy for the space sector was made through a gazette notification dated April 16, 2024. This amendment prescribes a liberalized entry route and provides 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. The aim of the liberalized entry routes is to attract potential investors in Indian space companies. The Union Cabinet approved these amendments earlier this year, and the notification comes just days before the scheduled visit of Tesla CEO Elon Musk, who is expected to meet with various Indian space companies during his visit from April 21 to 22.

Approvals for Musk’s satellite internet project, Starlink, are also nearing finalization. The notification details that up to 74 per cent FDI for satellite manufacturing and operation, satellite data products, and ground segment and user segment are allowed under the automatic route. Beyond 74 per cent, government route approval is required. FDI up to 49 per cent is allowed for launch vehicles and associated systems or subsystems, while the creation of spaceports for launching and receiving spacecraft is under the automatic route.

However, beyond 49 per cent, government permission is necessary. Additionally, 100 per cent FDI is allowed for the manufacturing of components and systems/sub-systems for satellites, ground segment, and user segment without government permission. Previously, FDI was permitted in the establishment and operation of satellites through the government approval route only. The Union Cabinet has eased the FDI policy in the space sector in line with the vision and strategy under the Indian Space Policy 2023.

This has been achieved by prescribing liberalized FDI thresholds for various sub-sectors/activities. The Department of Space consulted with internal stakeholders like IN-SPACe, ISRO, NSIL, and several industrial stakeholders in formulating these amendments. The notification also highlights the potential for New Generation Enterprises (NGEs) to develop capabilities and expertise in the areas of satellites and launch vehicles with increased investment. This could lead to the sophistication of products, global scale of operations, and an enhanced share of the global space economy.