Prime Minister Narendra Modi on Thursday said further liberalisation of foreign direct investment (FDI) in the space sector will push growth and innovations. Meanwhile, the industry hopes that such a move will help India expand its footprint in the global space industry.

Late on Wednesday, the government had announced easing FDI norms in space sector by allowing 100 per cent overseas investment in manufacture of components for satellites, as part of efforts to attract overseas players and private companies into the segment. The decision was taken at the Cabinet meeting.

“Charting new orbits for growth and innovation! Our government has updated the FDI policy in the space sector, paving the way for a galaxy of opportunities,” Modi wrote on X. In a separate post, Commerce & Industry Minister Piyush Goyal said that this reform will encourage greater FDI inflows, enhance ease of doing business, growth in investments and boost income and employment opportunities

Automatic route

According to a government statement, the satellite sub-sector has now been divided into three different activities with defined limits for foreign investment in each such sector, according to an official statement. Presently, FDI in the space sector is allowed up to 100 per cent in the area of satellite establishment and operations through government route only. By changing the current policy, the government has allowed up to 74 per cent FDI under automatic route in satellites manufacturing and operation, satellite data products, and ground and user segments.

Beyond this limit, government approval will be required in these areas for FDI, it said. Up to 49 per cent FDI is allowed through the automatic route for launch vehicles and associated systems or subsystems, creation of spaceports for launching and receiving spacecraft. Beyond 49 per cent, FDI in these activities would require government approval, it added. Further, up to 100 per cent overseas investments are permitted under the automatic route for manufacturing of components and systems/sub-systems for satellites, ground and user segments.

More positives

The industry hopes this decision will bring more positives for the sector. Lt. Gen. AK Bhatt (Retd.), Director General, Indian Space Association (ISpA) said that the liberal FDI limits will boost the confidence of all space industry members, including the biggest global players in the space and satellite domain.  “This will give India, access to the latest tech advances and much-needed funds not only from the country but from international investors too. At present, the space sector in India accounts for little over about 2 per cent of the global space economy and this move will help the country to gain a much larger pie in the global market,” he said.

Sanjay Nekkanti, CEO of Dhruva Space, hoped that the decision would pave the way for unprecedented growth and innovation, fostering a new era of space exploration and commercialisation in India.  “As a full-stack space engineering solutions company, Dhruva Space — building, launching and operating satellites — is poised to leverage these opportunities to make significant contributions to the global space community and achieve remarkable milestones across collaboration, innovation, capacity building and growth,” he said.