FDI norms notified, space sector to shoot from $8.4bn to $44bn

The government on Tuesday notified the amended FDI norms in the space sector, clearing the deck for 100 per cent overseas investment in making components for satellites, 74 per cent in satellite manufacturing and operations, and 49 per cent in launch vehicles.

Anything beyond the limit will need government approval.

The recent move comes against the backdrop of tepid foreign investment into the country’s space sector over the last two years.

Inflow of investment has been mainly affected by the challenges in the global economy, including factors such as high inflation, expansionary monetary policy and recessionary trends in key developed economies.

Experts indicate that the current move by the government to open up the space sector is a stepping stone in the country’s space economy touching the $44 billion mark by 2033, from around $8.4 billion now.

The sector is also expected to see investments to the tune of around $20 billion during this period in launch vehicles, satellite manufacturing, earth observation, communication, and in-orbit economy.

Till now, foreign investment in the space sector was allowed up to 100 per cent in the area of satellite establishment and operations through government route only. With the easing of the policy, the government hopes to attract overseas players and private companies into the segment.

In addition to this, up to 74 per cent FDI under automatic route has been allowed for satellites-manufacturing and operation, satellite data products, and ground and user segments. Government approval will be required beyond this limit.

Up to 49 per cent FDI will be allowed through the automatic route for launch vehicles and associated systems or subsystems, creation of spaceports for launching and receiving spacecraft and government nod will be needed beyond this limit.

“With India’s space economy projected to reach $44 billion by 2033, there is a distinct advantage in exploring the collaborative ecosystem by partnering with Indian innovators and startups. Developed global space economies like the USA, China, Russia, and the European Union are also advancing with technology and innovation. The sea change in the policy framework in India can provide the much-needed impetus for production scale and market growth,” said Alex T Koshy, Director of India Entry Advisory Services at SAS Partners, a corporate advisory firm facilitating foreign investments in India. Business Standard