New FDI Policy in Satellite Business

New FDI Policy in Satellite Business

Subject: Economy

Sec: External Sector

Increased FDI Limit

• The Finance Ministry has announced a new FDI limit for satellite-related activities, allowing up to 74% FDI via the automatic route.
• The new regulations are set to come into effect from April 16, providing a boost to foreign investment in the space sector.

Sectoral Guidelines:

• The investee entities will be subject to sectoral guidelines issued by the Department of Space, ensuring compliance with regulations and standards.
• Amended Policy for Space Sector:
• In February, the government approved an amendment to the FDI policy for the space sector, permitting 100% FDI.
• Satellite manufacturing & operation, satellite data products, and ground segment & user segment can now receive FDI up to 74% under the automatic route.
• Government Approval Route:
• Beyond the 74% limit, the government route will be applicable for FDI in satellite-related activities.
• Certain sub-sectors, such as launch vehicles and associated systems or sub-systems, have specific FDI thresholds and approval routes.
• Liberalized FDI Thresholds:
• The liberalized entry routes aim to attract potential investors to Indian companies in the space sector, aligning with the Indian Space Policy 2023.
• Definition of Satellite-Related Activities:
• The notification provides definitions for various satellite-related activities, including satellite manufacturing and operation, satellite data products, ground segment, user segment, launch vehicles, creation of spaceports, and manufacturing of components and systems.
• Facilitating End-to-End Satellite Operations:
• The policy covers end-to-end activities related to satellites, including manufacturing, operation, data products, ground infrastructure, and user terminals, providing a comprehensive framework for satellite operations.

Indian Space Policy 2023

• The Indian Space Policy 2023 aims to enable, encourage, and develop a flourishing commercial presence in space, recognizing the critical role of the private sector in the space economy.

Key highlights of the policy:

Creation of Entities:

• InSPACe (Indian National Space Promotion and Authorization Centre): This entity serves as a single window clearance and authorization agency for various space activities, facilitating private sector participation. It also shares technologies, products, processes, and best practices with non-government entities (NGEs) and government companies.
• New Space India Limited (NSIL): Responsible for commercializing space technologies and platforms developed through public expenditure, as well as manufacturing, leasing, or procuring space components and technologies from the private or public sector.
• Department of Space: Provides overall policy guidelines and acts as the nodal department for implementing space technologies. It also coordinates international cooperation and resolves disputes arising from space activities.
• Rationalizing ISRO’s Role:
• ISRO will transition out of manufacturing operational space systems and focus on R&D in advanced technology. Mature systems will be transferred to industries for commercial usage, allowing ISRO to concentrate on cutting-edge research and long-term projects.
• Private Sector’s Role:
• NGEs (including the private sector) are allowed to undertake end-to-end activities in the space sector, including the establishment and operation of space objects, ground-based assets, and related services such as communication, remote sensing, and navigation.
• NGEs can design and operate launch vehicles, establish infrastructure, make filings with the International Telecommunication Union (ITU), and engage in commercial recovery of asteroid resources.
• The private sector’s involvement spans satellite ownership, communication services, remote sensing data dissemination, and space transportation.