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

The FDI policy for the space sector in India has been amended through a gazette notification dated April 16, 2024. This amendment aims to provide a liberalized entry route and clarity for foreign direct investment in various aspects of the space industry, including satellites, launch vehicles, spaceports, and manufacturing of space-related components and systems. The liberalized entry routes introduced in the amended policy are intended to attract potential investors in Indian space companies.

The Union Cabinet approved these amendments earlier in the year, and the notification comes just before the scheduled visit of Tesla CEO Elon Musk to India. It is expected that during his visit, Musk will meet with various Indian space companies, and approvals for his satellite internet project, Starlink, are nearing finalization. The notification outlines the specific FDI thresholds for different aspects of the space sector.

Up to 74% FDI for satellite manufacturing and operation, satellite data products, and ground segment and user segment activities is allowed under the automatic route, while activities beyond 74% require government approval. For launch vehicles and associated systems or subsystems, up to 49% FDI is allowed under the automatic route, with government permission required beyond that threshold. Additionally, 100% FDI is permitted for manufacturing components and systems/sub-systems for satellites, ground segment, and user segment without government permission.

The amendments to the FDI policy align with the vision and strategy outlined in the Indian Space Policy 2023. They aim to ease FDI thresholds for various sub-sectors and activities within the space sector. The Department of Space consulted with internal stakeholders, including IN-SPACe, ISRO, NSIL, and industrial stakeholders to develop these amendments.

The increased investment in the space sector is expected to enable Indian companies to enhance their capabilities, achieve product sophistication, operate on a global scale, and increase their share of the global space economy.