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Government approved 100% FDI under automatic route in space sector
The Union cabinet chaired by Prime Minister Narendra Modi has recently decided to amend the Foreign Direct Investment policy on the space sector. Now the government has decided to approve the 100% FDI under automatic route in the space sector.
Overall in the new policy, satellite sub-sectors have been divided into three parts with a defined limit of Foreign Direct Investment in each such sector.
These three activities under the amended policy are as follow:
Upto 74% under automatic route:
Under this category, some major components are included such as Satellites-Manufacturing & Operation, Satellite Data Products and Ground Segment & User Segment. In these activities 74% FDI is allowed under automatic route.
Upto 49% under Automatic route:
In this activity area, Launch Vehicles and associated systems or subsystems, Creation of Spaceports for launching and receiving Spacecraft, 49% FDI is allowed under automatic route.
Upto 100% under Automatic route:
In this category activities that attract 100% FDI are as follows: Manufacturing of components and systems/ sub-systems for satellites, ground segment and user segment.
Importance:
Space sector in India had not been as important in the past as it is currently because of its increasing exploration. There is no doubt that Space technology is one of the expensive technologies and there is also risk associated with the Space endeavors and only National agencies were engaged in this sector for decades. But the involvement of private sector players has made this assumption wrong. These private players are expected to complement, augment and lead the way of the Space sector and harness opportunities and innovation rapidly.
Major reforms;
In 2020, India has started reforms that invite private sector companies to take interest in the space sector. These reforms are included Geospatial Guidelines’ , ‘Indian Space Policy’, the Indian National Space Promotion and Authorisation Centre (IN-SPACe), and passing the Telecommunications Act 2023 that, among other departures from the Indian Telegraph Act, 1885, provided for satellite broadband services.
In February 2024, the government decided to open the way for 100% foreign direct investment in the space sector, especially manufacturing of components and systems/sub-systems for satellites, ground segment and user segment. The 74% FDI in satellite-manufacturing, operations, and data products; and up to 49% in launch vehicles, space ports, and their corresponding systems is allowed.
Conclusion:
Allowing FDI through automatic route in the space sector, India has taken the one step forward towards spurring the contributions of private companies. The decision to allow 100 % FDI in the space sector provides India with the ability to take advantage of its foreign ties to compete with the world superpower in the space sector – China.
Important Questions:
- Write down the revolution in the Indian Space sector.
- Describe some major reforms in the Indian Space sector.
