Govt allows up to 100 per cent FDI in space, all you need to know about the key change

The government has approved the amendment in the Foreign Direct Investment (FDI) policy for the space sector.

According to the existing FDI policy, FDI is permitted in the establishment and operation of satellites through the government approval route only. Now, the government has eased the FDI policy in the space sector by prescribing liberalised FDI thresholds for various sub-sectors and activities.

Under the amended FDI policy, up to 100% FDI is allowed in the space sector. The liberalised entry routes under the amended policy are aimed to attract potential investors into Indian companies in the sector.

The entry route for the various activities under the amended policy are as follows:

Up to 100% under the automatic route: Manufacturing of components and systems/ sub-systems for satellites, ground segment and user segment.

Up to 74% under the automatic route: Satellites manufacturing and operation, satellite data products and ground segment and user segment. Beyond 74%, these activities are under the government route.

Up to 49% under the automatic route: Launch vehicles and associated systems or subsystems, creation of spaceports for launching and receiving spacecraft. Beyond 49% these activities are under government route.

“The proposed reforms seek to liberalise the FDI policy provisions in the space sector by prescribing liberalised entry route and providing clarity for FDI in satellites, launch vehicles and associated systems or subsystems, creation of spaceports for launching and receiving spacecraft and manufacturing of space-related components and systems,” the government said in a press release.

The proposed amendment could help attract foreign investments from the likes of Elon Musk's SpaceX, Jeff Bezos' Blue Origin and United Launch Alliance.

The government said that the increased private sector participation would help to generate employment, enable modern technology absorption and make the sector self-reliant

Following the announcement, shares of space-related companies like MTAR Technologies (+6.3%), Apollo Micro Systems (+4.9%), Paras Defence (+2.4%) saw strong traction from investors.