Finance Ministry’s new FDI limits for satellite activities, effective April 16, allow 100% FDI in the space sector with specific limits for different activities. The move is aimed at attracting more investors to the Indian space industry

The Finance Ministry has notified a new Foreign Direct Investment (FDI) limit for various satellite-related activities under Foreign Exchange Management (Non-Debt Instruments) Rules. This means that all key regulations are in place to implement the higher FDI limit.

The notification said, “The investee entity shall be subject to sectoral guidelines as issued by the Department of Space from time to time.” The new rules will come into effect from April 16. Earlier in February, the Government approved an amendment in FDI policy for the space sector.

Under the amended FDI policy, 100 per cent FDI is allowed in the space sector. Now, satellite manufacturing & operation, satellite data products and ground segment & user segment can get FDI up to 74 per cent under the automatic route, beyond which government route will be applicable. Sub-sector comprises launch vehicles and associated systems or sub-systems. The creation of spaceports for launching and receiving spacecraft can get FDI through automatic routes up to 49 per cent. Here, too, beyond 49 per cent, these activities are under government route. One hundred per cent FDI under automatic route has now been permitted to manufacture components and systems/sub-systems for satellites, ground segment and user segment.

To date, FDI is permitted to establish and operate satellites only through the government’s approval route. In line with the vision and strategy under the Indian Space Policy 2023, the Union Cabinet has eased the FDI policy on space sector by prescribing liberalized FDI thresholds for various sub-sectors/activities “The liberalized entry routes under the amended policy are aimed to attract potential investors to invest in Indian companies in space,” a government statement said.

Definitions Overview

The notification defines various satellite-related activities. Here, “Satellites – Manufacturing and Operation” means end-to-end manufacturing and supply of satellite or payload, establishing the satellite systems, including control of in-orbit operations of the satellite and payload. “Satellite Data Products” refers to the reception, generation, or dissemination of earth observation or remote sensing satellite data and data products, including Application Interfaces (API).

“Ground Segment” means the supply of satellite transmit or receive earth stations, including earth observation data receive stations, gateways, teleports, satellite Telemetry, Tracking and Command (TTC) stations, Satellite Control Centres (SCC), etc. “User Segment” means the supply of user ground terminals for communicating with the satellite, which is not covered under the ground segment.

“Launch Vehicles and Associated Systems or Sub-systems” refers to a vehicle and its stages or components designed to operate in or place spacecraft with payloads or persons in a sub-orbital trajectory, earth orbit or outer space. “Creation of Spaceports for launching and receiving Spacecraft” means that a spaceport (also referred to as a launch site) may be regarded as the base from which spacecraft are launched and consists of facilities involving devices for transportation to, from and via outer space.

“Manufacturing of components and systems or sub-systems for satellites Ground Segment and User Segment” comprises the manufacturing and supply of the electrical, electronic and mechanical components systems or sub-systems for satellites, Ground Segment and User Segment.

(With Agency Inputs)