CABINET APPROVES AMENDMENT TO SPACE SECTOR'S FDI POLICY

1. In February 2024, the Union Cabinet approved an amendment in the Foreign Direct Investment (FDI) policy on the space sector.
2. Under the existing policy, Foreign Direct Investment (FDI) is allowed for the establishment and operation of satellites solely through the government approval route.
3. But, under the amended FDI policy, up to 100% FDI is allowed in the space sector, with different entry routes for various activities.

Amendments in the FDI Policy

1. Liberalization of Space Sector:     

   1. The space sector has been liberalized for foreign direct investment in prescribed sub-sectors/activities, dividing the satellites sub-sector into three activities with defined limits for foreign investment in each.
   2. The reform is expected to enhance the Ease of Doing Business, leading to greater FDI inflows and contributing to growth in investment, income, and employment.

2. FDI Policy Changes:

   1. Activities like satellites manufacturing and operation, satellite data products, and ground segment/user segment allow up to 74% FDI under the automatic route.
   2. Launch vehicles, creation of spaceports, and manufacturing of components/systems for satellites allow up to 49% FDI under the automatic route.
   3. Manufacturing of components/systems/sub-systems for satellites, ground segment, and user segment allows up to 100% FDI under the automatic route.

3. Indian Space Policy 2023:

   1. The Indian Space Policy 2023 was notified to unlock India's potential in the space sector through enhanced private participation.
   2. It aims to augment space capabilities, develop commercial presence, drive technology development, pursue international relations, and create an ecosystem for effective space application implementation.

4. Consultation and Stakeholder Involvement:

   1. The Department of Space consulted with internal stakeholders like IN-SPACe, ISRO, NSIL, and industrial stakeholders.
   2. Non-Governmental Entities (NGEs) are expected to benefit from increased investment, leading to sophistication of products, global scale operations, and a larger share of the global space economy.

5. Reforms and Entry Routes:

   1. The proposed reforms aim to liberalize FDI policy provisions in the space sector by prescribing liberalized entry routes and providing clarity for FDI in various sub-sectors/activities.

Advantages of Liberalizing FDI in the Space Sector:

1. Attracting Potential Investors: The revised policy aims to draw potential investors to inject funds into Indian space companies by providing more accessible entry routes.
2. Improving Ease of Doing Business (EoDB): The reformed FDI policy is set to enhance the Ease of Doing Business in the nation, facilitating increased FDI inflows and fostering investment and income growth.
3. Expanding Global Market Share: By liberalizing FDI, India may seize a larger portion of the global space market, a realm where it currently holds merely 2 percent.
4. Generating Employment Opportunities: Enhanced investments and sector growth are anticipated to fuel employment generation, potentially alleviating the current employment count of approximately 50,000 individuals.
5. Technology Assimilation: With heightened FDI and private sector collaborations, the space sector can absorb cutting-edge global technologies, thereby fostering self-reliance.
6. Integration with Global Supply Chains: A more open FDI regime would integrate Indian firms into global value chains, empowering them to establish manufacturing facilities domestically, thereby promoting the 'Make In India' and 'Atmanirbhar Bharat' initiatives.

Conclusion:

The recent Cabinet approval of amendments to the Foreign Direct Investment (FDI) policy for the Space Sector reflects a commitment to realizing an Atmanirbhar Bharat.

By liberalizing FDI in key space sub-sectors, the government aims to boost investment, income, and employment opportunities while fostering self-reliance and integration into global value chains.

These reforms align with the Indian Space Policy 2023 and support the broader 'Make In India' and 'Atmanirbhar Bharat' initiatives.