Introduction: India’s ambitions in the space sector have led to amendments in the FDI Policy, aiming to enhance international collaboration, innovation, and competitiveness. This article delves into the rationale behind the amendment, the existing policy framework, and the significant changes made to encourage foreign investment in various aspects of the space industry.
In continuation of broader space vision as outlined in Indian Space Policy, 2023, the government of India has amended the FDI Policy. Let explore the rationale of amendment, existing policy and the amendment made in FDI Policy in space sector.
Rationale:
- India is eyeing to get a slice of global space market which is poised to be $ 47.3 trillion by 2032. Presently India’s share is just 2% of global market.
- Satellite sector needs big funds which are available at the international market at lower and reasonable cost.
- India space sector needs international collaboration and strategic tie-ups and latest technology advancements.
Besides, liberalization would promote the innovation, employment generation, and integration with global value chains. Unless the space sector is liberalized, India would not be able to be global space powerhouse.
Existing FDI Policy in space sector:
As per Clause 5.2.12 of Consolidated FDI Policy 2020 as amended upto date, the satellites-establishment and operation subject of sectoral guidelines of Department of Space/ISRO is subject to government approval route upto 100% of equity.
Please note that the FDI was allowed only through government approval route.
Amendment on 21st February, 2024:
The satellites sub-sector has been divided into three activities, each with defined limits for foreign investment.
1. Satellites Activities:
- Up to 74% FDI allowed via the Automatic route.
- Activities include manufacturing and operating satellites, producing satellite data products, and managing ground segment and user segment.
2. Launch Vehicles and Spaceports:
- Up to 49% FDI permitted via the Automatic route.
- This applies to activities involving launch vehicles, associated systems or subsystems, and the establishment of spaceports.
3. Manufacturing Components and Systems:
- 100% FDI allowed via the Automatic route.
- This includes manufacturing components and systems/sub-systems for satellites, ground segment, and user segment without any restriction on foreign investment percentage.
Conclusion: The recent amendment in India’s FDI Policy for the space sector marks a significant milestone in the country’s quest for global space leadership. By opening up avenues for increased foreign investment across satellite activities, launch vehicles, and component manufacturing, India is poised to attract international collaboration, foster innovation, and propel its space industry towards unprecedented growth. This move not only aligns with India’s broader space vision but also sets the stage for transformative advancements and opportunities for both domestic and international stakeholders.
In case you have any concern and queries or need any support in FDI/compliance you may like to contact us.
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Abhinarayan Mishra, FCA, FCS; KPAM & Associates, Chartered Accountants, Dwarka, New Delhi; +9910744992, ca.abhimishra@gmail.com
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