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Existing Foreign Direct Investment (FDI) policy only permitted establishment and operation of satellites through the government approval route. The Department of Space conducted a consultation with stakeholders like Indian National Space Promotion and Authorisation Centre (IN- SPACe), Indian Space Research Organisation (ISRO) and NewSpace India Limited (NSIL) and several private enterprises. Purpose of this consultation was to understand pre-requisites of achieving sophistication in space-related products, global scale of operations and higher share of global space economy.
As a consequence to this consultation a new policy aimed towards augmenting India’s space capabilities was notified by the Union Cabinet on 21 February 2024 . The policy provides fair means for private enterprises to establish meaningful presence in space industry. Government of India aims to use space as a driver of technology development and create a thriving ecosystem for effective implementation of space applications among all stakeholders.
Under the Indian Space Policy of 2023, the Union Cabinet of India eased the FDI Policy inthe space sector by prescribing liberalised FDI thresholds for various sub-sectors and activities. The new amendments to the FDI Policy in the space sector divide the sector in three categories, based on the activities and its defined limit of FDI. Under the amended FDI policy, 100% FDI is allowed in space sector. The entry route for these activities under the amended policy are as follows:
| Defined categories for FDI in space industry | 2023 Policy – permissible FDI under automatic route | 2023 Policy – permissible FDI under Government route only |
| Manufacturing of components and systems/ sub-systems for satellites, ground segment and user segment | 100% | N/A |
| Satellites manufacturing & operation, satellite data products and ground segment &; user segment | <=74% | >74% |
| Launch vehicles and associated systems or subsystems, creation of spaceports for launching and receiving spacecraft | <=49% | >49% |
Changes to the foreign direct investment policy will positively work towards boosting investments in the space economy for India and bolster ease of doing business in the Indian space sector.
Author: Rahul Goel and Anu Monga