Under the new guidelines, foreign investors are now allowed to invest up to 100% of FDI in the satellite sector, with 74% falling under the automatic route. This includes investments in satellite manufacturing and operations, the ground segment, user segment, and satellite data products.
The Ministry of Finance, headed by Nirmala Sitharaman, has introduced updated Foreign Direct Investment (FDI) regulations for satellites in the Foreign Exchange Management Rules, with the goal of attracting more foreign investment in satellite-related activities.
This announcement comes after the recent approval of a policy by the Union Cabinet to liberalize foreign investments in the space sector.
Foreign investors can now invest up to 100% of FDI under the new guidelines, with 74% falling under the automatic route. This includes investments in satellite manufacturing, operations, the ground segment, user segment, and satellite data products.
This notification comes just before the expected visit of Elon Musk, CEO of Tesla, to India. Musk is scheduled to meet with various Indian space companies during his visit from April 21 to 22. Approvals for Musk’s Starlink satellite internet project are also close to being finalized.
The Finance Ministry’s notification, known as the Foreign Exchange Management (Non-debt Instruments) (Third Amendment) Rules, 2024, went into effect on April 16.
Under the updated regulations, foreign investors can now invest up to 100% under the automatic route for satellite component manufacturing, the ground segment, and user segment. FDI of up to 49% under the automatic route is permitted for launch vehicles, associated systems, sub-systems, and spaceport establishment. Investments beyond this limit will require government approval.
The notification emphasizes that the investee entity must comply with guidelines issued by the Department of Space. Previously, FDI in the sector was limited to satellite establishment and operation, requiring government approval.
These regulatory changes demonstrate the government’s efforts to attract more foreign investment and expertise in the space sector. By increasing FDI limits and simplifying approval processes, the government aims to promote innovation, technological advancements, and economic growth in the satellite industry.
