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

The FDI policy for the space sector has been amended through a gazette notification dated April 16, 2024. This amendment provides a liberalized entry route and clarity for FDI in satellites, launch vehicles, creation of spaceports, and manufacturing of space-related components and systems. The objective is to attract potential investors in Indian space companies. The Union Cabinet approved these amendments earlier this year.

The notification arrives just 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. Concurrently, approvals for Musk’s satellite internet project, Starlink, are nearing finalization. The amended policy allows up to 74% FDI for satellite manufacturing & operation, satellite data products, and ground segment & user segment under the automatic route. Activities beyond 74% FDI require government approval.

Additionally, up to 49% FDI is allowed for launch vehicles and associated systems or subsystems under the automatic route, with government permission required beyond 49%. The policy also permits 100% FDI for manufacturing of components and systems/sub-systems for satellites, ground segment, and user segment without government permission. This is a significant change from the earlier norm, where FDI was only permitted through the government approval route for the establishment and operation of satellites. In line with the vision and strategy under the Indian Space Policy 2023, the Union Cabinet has relaxed the FDI policy in the space sector.

The Department of Space consulted with internal stakeholders such as IN-SPACe, ISRO, NSIL, and several industrial stakeholders in making these amendments. The amendment is aimed at promoting greater investment in the space sector, leading to the development of capabilities and expertise in satellite and launch vehicle technology. This increased investment is expected to bring about a sophistication of products, a global scale of operations, and an enhanced share of the global space economy.