New FDI Rules for Space Sector Notified by Centre Ahead of Elon Musk’s Visit

An amendment has been made 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, creation of spaceports for launching and receiving spacecraft, and 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 notification comes 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 per cent FDI for satellite manufacturing & operation, satellite data products, and ground segment & user segment are allowed under the automatic route. Beyond 74 per cent, government permission is required for these activities.

FDI up to 49 per cent is allowed for launch vehicles and associated systems or subsystems, while creation of spaceports for launching and receiving spacecraft are under automatic route, but beyond 49 per cent, government permission would be required. Additionally, 100 per cent FDI is allowed for manufacturing of components and systems/sub-systems for satellites, ground segment, and user segment without government permission.

The amendment in the FDI policy aligns with the vision and strategy under the Indian Space Policy 2023. The Union Cabinet has eased the FDI policy in the space sector by prescribing liberalized FDI thresholds for various sub-sectors/activities.

The Department of Space consulted with internal stakeholders like IN-SPACe, ISRO, and NSIL, as well as industrial stakeholders. Non-Governmental Entities (NGEs) have developed capabilities and expertise in the areas of satellites and launch vehicles, and with increased investment, they would be able to achieve sophistication of products, global scale of operations, and an enhanced share of the global space economy.