Indian Government opens space sector for foreign investments: Amendment signals major boost for satellite industry

The Ministry of Finance vide notification dated 16th April 2024 has notified the third amendment to the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 (“Amendment”). This Amendment aims to further liberalize the scope of Foreign Direct Investments (“FDI”) in the space sector, thereby bolstering foreign investments in Indian markets and internationally recognized standards.

FDI in the space sector was previously permitted exclusively through the approval route i.e., 100% through the government approval route. With this Amendment, the Government has allowed FDI in satellite manufacturing and operation, satellite data products, ground segment, and user segment for satellites through automatic route up to 74%. Further, FDI in launch vehicles and associated systems or sub-systems, creation of spaceports for launching and receiving spacecraft through automatic route stands revised to 49% through automatic route. Furthermore, the allowance of 100% FDI through automatic route in manufacturing of components and systems or sub-systems for satellites, ground segments and user segments has paved the way to boost investments and achieve new milestones.

While these investments remain subjective to sectoral guidelines issued by the Department of Space from time to time, the Amendment reassures the government’s commitment to encourage international collaboration, inflow of expertise, technology, and best industry practices from across the globe. This move can significantly propel domestic entities to diversify their avenues, open new revenue streams and enhance their global competitiveness.