Centre Notifies New FDI Rules for Space Sector Prior to Elon Musk’s Visit

The Indian government recently made an amendment in the FDI policy for the space sector 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.

It also covers the creation of spaceports for launching and receiving spacecraft and the manufacturing of space-related components and systems. The liberalized entry routes under the amended policy are aimed at attracting potential investors in Indian companies in the space sector.

The Union Cabinet gave approval to these amendments earlier this year. The timing of the notification is noteworthy, coming just days ahead of 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. According to the notification, up to 74 percent FDI for satellite manufacturing and operation, satellite data products, and ground segment and user segment is allowed under the automatic route.

However, beyond 74 percent, government permission is required. For launch vehicles and associated systems or subsystems, as well as the creation of spaceports for launching and receiving spacecraft, FDI up to 49 percent is allowed under the automatic route, but beyond 49 percent, government permission is necessary.

Additionally, 100 percent FDI is permitted for the manufacturing of components and systems/sub-systems for satellites, ground segment, and user segment without government permission. Prior to this amendment, FDI was permitted in the establishment and operation of satellites through the government approval route only.

The Union Cabinet’s decision to ease the FDI policy aligns with the vision and strategy under the Indian Space Policy 2023. The Department of Space consulted with internal stakeholders such as IN-SPACe, ISRO, and NSIL, as well as several industrial stakeholders in formulating these amendments.

The government expects that with increased investment, Indian companies will be able to achieve sophistication in their products, expand their global operations, and enhance their share of the global space economy.