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India Implements a New FDI Policy, Allowing 100% Foreign Investment in the Space Industry: DEETS INSIDE
After the Union Cabinet approved changes to the Foreign Direct Investment (FDI) policy on Wednesday, shares of the space industry saw a 7% increase during early morning trade today.
The Union Cabinet approved a change to the Foreign Direct Investment (FDI) policy on the space sector on Wednesday, which sent space-related equities skyrocketing to 7% in early morning trading today. This was carried out in an attempt to draw in private businesses and international participants to the space market.
Union Cabinet approved changes to the FDI policy
Presided over by Prime Minister Narendra Modi, the Cabinet made the decision. According to a government press release, the sub-sector of satellites has been reorganized into three distinct activities, "each with specific limits on foreign investment."
Currently, the space sector allows 100 percent foreign direct investment (FDI) only through official channels for the establishment and operation of satellites. The government changed the existing policy to permit up to 74% FDI under automatic routes in the ground and user segments, satellite data products, and satellite manufacture and operation.
After this point, FDI in these regions will need government clearance, the statement stated. For launch vehicles and related systems or subsystems, as well as the construction of spaceports to launch and receive spacecraft, up to 49 percent of FDI is permitted through the automated route.
It further stated that FDI in these activities would need government clearance above 49 percent. Furthermore, under the automatic path, up to 100 percent of investments may be made abroad to produce systems and subsystems as well as components for the satellite, ground, and user sectors.
By involving the private sector more, the industry would become more self-sufficient, create jobs, and be able to adopt current technologies. It is anticipated that Indian businesses will be incorporated into global value chains.
The government hopes to liberalize the FDI policy provisions in the space sector with this decision, which lays out clear guidelines and easy entry points for foreign investments in spaceport construction, spacecraft launch and reception facilities, satellites, launch vehicles, and related systems and subsystems. With this, businesses will be able to establish their manufacturing plants domestically, supporting the government's Made in India programs.
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