GoI loosens FDI restrictions on India's private aerospace sector, wants to attract major investments

The Indian government has announced the relaxation of foreign direct investment (FDI) norms in the space sector. The move, approved by the Union Cabinet, entails the division of the satellite sub-sector into three distinct activities, each with defined limits for foreign investment.

Anurag Thakur, the Minister of Information and Broadcasting, highlighted the significance of this step, stating, “This will encourage foreign investment in the country and Make in India.”

Under the amended FDI policy, India now permits up to 74 per cent FDI under the automatic route in satellite manufacturing and operation, satellite data products, and ground and user segments. However, beyond this threshold, government approval will be necessary for FDI in these areas.

For launch vehicles and associated systems or subsystems, as well as the creation of spaceports for spacecraft launching and receiving, up to 49 per cent FDI is allowed through the automatic route. Any FDI exceeding this limit will require government approval.

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Additionally, the government has sanctioned up to 100 per cent overseas investments under the automatic route for the manufacturing of components and systems/sub-systems for satellites, ground, and user segments.

The relaxation of FDI norms aligns with the vision and strategy outlined in the Indian Space Policy 2023. The Department of Space collaborated with internal stakeholders such as IN-SPACe, ISRO, NSIL, and various industrial stakeholders to formulate these amendments.

This move is expected to bolster private sector participation in the space sector, leading to employment generation, technology absorption, and bolstering sector self-reliance. Furthermore, it aims to integrate Indian companies into global value chains and facilitate the establishment of manufacturing facilities.

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By liberalizing FDI policy provisions, the government seeks to streamline entry routes and offer clarity for overseas investments in satellites, launch vehicles, spaceports, and manufacturing of space-related components and systems.

(With inputs from agencies)