Government Relaxes FDI Regulations in the Space Sector to Stimulate International Investment


Days before Tesla CEO Elon Musk’s anticipated visit to India to engage with several Indian space companies, the government has issued amendments to the foreign direct investment (FDI) policy in the space sector. These changes aim to lure international investors into segments such as satellite manufacturing and launch vehicles. The amended FDI policy, conveyed through a gazette notification dated April 16, 2024, outlines a more flexible entry route and offers clarity on FDI regulations concerning satellites, launch vehicles, associated systems or subsystems, establishment of spaceports for spacecraft launch and reception, as well as the production of space-related components and systems.

“The Foreign Exchange Management (Non-debt Instruments) (Third Amendment) Rules, 2024,” as stated in the gazette notification, introduce more liberalized entry routes, aiming to entice potential investors into Indian space companies. These amendments received approval from the Union Cabinet earlier this year. The notification precedes the anticipated visit of Tesla CEO Elon Musk, scheduled from April 21 to 22, during which he is expected to engage with various Indian space firms. Concurrently, approvals for Musk’s satellite internet project, Starlink, are nearing completion.

According to the notification, automatic route permits up to 74 percent FDI for satellite manufacturing and operation, satellite data products, and ground segment and user segment. Beyond 74 percent, government approval is necessary. For Launch Vehicles and associated systems or subsystems, and the establishment of Spaceports for spacecraft launch and reception, automatic route allows up to 49 percent FDI, with government permission required beyond this threshold.

Furthermore, the manufacturing of components and systems/sub-systems for satellites, ground segment, and user segment now permits 100 percent FDI without the need for government permission. Previously, under the existing norms, FDI was only allowed for the establishment and operation of satellites through the government approval route.

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