The Finance Ministry has notified new foreign direct investment limits under the Foreign Exchange Management Rules for satellite-related activities, enabling foreign investors to firm up investment plans in the sector.
The move comes after the Union Cabinet had in February this year approved a policy for liberalizing foreign investments in the space sector.
This allows up to 100% FDI in the sector with 74% under the automatic route for satellite manufacturing and operations, ground segment and user segment as well as satellite data products.
The notification by the finance ministry comes just days ahead of Elon Musk’s visit to India where he is reported to meet Indian space companies. The Tesla CEO is slated to visit India on April 21 and 22. Approvals are also almost in place for his satellite internet venture Starlink.
According to the Finance Ministry notification, the new rules called the Foreign Exchange Management (Non-debt Instruments) (Third Amendment) Rules, 2024 are effective from April 16.
Up to 100% FDI under the automatic route is now permitted for the manufacturing of components and systems or sub-systems for satellites, Ground Segment, and User Segments. FDI up to 49% under the automatic route is now permitted for launch vehicles and associated systems or sub-systems and the creation of spaceports for launching and receiving spacecraft while beyond this limit government approval will be required.
“The investee entity shall be subject to sectoral guidelines as issued by the Department of Space from time to time,” said the notification.
Previously, FDI in the sector was permitted in the establishment and operation of satellites through the government approval route only.
The article originally appeared on Business Today.
