India has expanded the liberalization of its space sector by revising its Foreign Direct Investment (FDI) policy. This adjustment is expected to encourage increased foreign investment in satellite development, launches, and the associated ground infrastructure.

The policy approved by the Union Cabinet guarantees 100 percent foreign direct investment (FDI) in the production of components, systems, or sub-systems for satellites, ground segments, and user segments. Conversely, 74 percent of FDI is allowed for satellite manufacturing and operations, satellite data products, and ground segments and user segments. Any investment beyond 74 percent in these activities requires government approval. Furthermore, for the development of launch vehicles, associated systems, and the establishment of spaceports for spacecraft launches and receptions, FDI through the automatic route is capped at 49 percent.

As per the current policy, foreign direct investment (FDI) is allowed for setting up and operating satellites only through the government approval route. In alignment with the vision and strategy outlined in the Indian Space Policy 2023, the Union Cabinet has relaxed the FDI policy in the space sector by introducing liberalized FDI thresholds for different sub-sectors and activities, as stated in a government release.

"The proposed reforms may liberalize the FDI policy provisions in the space sector by prescribing a liberalized entry route and providing clarity for FDI in satellites, launch vehicles, and associated systems or subsystems, the creation of spaceports for launching and receiving spacecraft and manufacturing of space-related components and systems", a government statement said.

"After the pioneering initiative to administratively allocate satellite spectrum, the decision to allow a liberal FDI policy for space is yet another significant move forward. The liberal FDI limits by automatic route for end-to-end satellite manufacturing and operation, components and systems/sub-systems for satellites, satellite data products, and ground segment & user segment, launch vehicles, the creation of spaceports will boost the confidence of all space industry members, including the biggest global players in the space and satellite domain", said AK Bhatt, Director-General, Indian Space Association (ISpA).

"This will give India access to the latest technological advances and much-needed funds not only from the country but from international investors too. At present, the space sector in India accounts for little over about two percent of the global space economy, and this move will help the country to gain a much larger pie in the global market", he added. "This increased private sector participation would help to generate employment, enable modern technology absorption and make the sector self-reliant. It is expected to integrate Indian companies into global value chains. With this, companies will be able to set up their manufacturing facilities within the country duly encouraging 'Make in India' and 'Atmanirbhar Bharat' initiatives of the government", it said.