The Union Cabinet approved an amendment to the foreign direct investment (FDI) policy, allowing for 100% FDI in the space sector. The amendment is intended to increase investment in Indian space companies. It is expected that increased private sector participation would help generate employment, enable modern technology absorption, and make the sector self-reliant. It is also expected to integrate Indian companies into global value chains. What exactly has changed in the FDI policy? Under India's present FDI policy, there are two routes for foreign investment in the country — the automatic route and the government route. Investment in the establishment and operation of satellites is only permitted through the government route. This means that for the infusion of any foreign investment in satellites, companies would have to obtain prior government approval regardless of the amount or extent of the investment. Furthermore, this route also requires that when such a company commences business or makes downstream investment, it must comply with the relevant sectoral conditions on entry route, conditionalities, and caps. In the amended FDI policy, the Cabinet has prescribed new liberalized FDI thresholds for various sub-sectors/activities in space. These are as follows: Up to 74% investment in satellite manufacturing and operation, satellite data products, and ground segments and user segments through the automatic route. Post the 74% threshold, investments in these sub-sectors would have to be made through the government route. Up to 49% of investment in launch vehicles and associated systems or subsystems, creation of spaceports for launching and…
