New Delhi: In a significant move aimed at attracting overseas players to the Indian space industry, the Narendra Modi-led Union Cabinet on Wednesday approved amendments to the foreign direct investment (FDI) policy in the space sector. The amendment allows for 100% overseas investment in the manufacturing of components for satellites. The space sector, considered crucial for India's technological advancement and economic growth, has been "liberalized for FDI in prescribed sub-sectors/activities," according to an official statement from the government of India. This policy reform in the Indian space industry is expected to enhance ease of doing business, leading to greater FDI inflows and contributing to the growth of investment, income, and employment in the country.

Everything you need to know about Govt easing FDI norms in space

The amendment, aligned with the vision of an Atmanirbhar Bharat (self-reliant India), divides the satellite sub-sector into three activities with defined limits for foreign investment in each sector.

Under the new policy, up to 74% FDI is allowed under the automatic route in satellite manufacturing and operation, satellite data products, and ground and user segments. Beyond this limit, government approval will be required for FDI in these areas.

For launch vehicles and associated systems or subsystems, as well as the creation of spaceports for launching and receiving spacecraft, up to 49% FDI is permitted through the automatic route. Beyond this threshold, government approval will be necessary.

The most significant change comes in the form of allowing up to 100% overseas investments under the automatic route for the manufacturing of components and systems/sub-systems for satellites, ground, and user segments. 

This move is expected to foster increased private sector participation, generate employment, enable technology absorption, and make the sector self-reliant.

Policy amendment after consultations with stakeholders 

The policy amendment was formulated after consultations with internal stakeholders such as IN-SPACe, ISRO, and NSIL, along with various industrial stakeholders. Non-governmental entities have already demonstrated capabilities and expertise in satellite and launch vehicle technologies, and increased investment is expected to further enhance their sophistication, global operations, and share in the global space economy.

This move is seen as a significant step towards integrating Indian companies into global value chains, fostering 'Make In India' and 'Atmanirbhar Bharat' initiatives, and positioning India as a key player in the global space industry.