Centre Releases Revised Notification On FDI Rules in Space Sector; Eases FDI Ahead of Elon Musk’s India Visit

The Centre, recently, announced changes and revisions to the Foreign Direct Investment (FDI) limit in the space sector under the Foreign Exchange Management Rules (FEMA), in anticipation of Starlink CEO Elon Musk’s upcoming visit to India. His visit is scheduled from April 21 to April 22 and is expected to bolster opportunities for an increased investment in India’s constantly evolving space industry.

The revised notification will be effective from April 16 and set to permit 100% FDI in certain sectors within the space industry, aligning with the Indian Space Policy 2023. Under the new guidelines several activities such as satellite manufacturing and operation, satellite data products, and ground and user segment now have the freedom to garner up to 100% FDI. The revised guidelines are set to change the landscape of the space industry entirely since previously, these sectors were limited to 74% FDI, with investments beyond this threshold requiring government approval.

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Additionally, the advent of spaceports for launching and receiving spacecraft can also now receive up to 49% FDI through automatic routes, however, further investments wll be subject to government approval. Moreover, the manufacture of components and systems/sub-systems for satellites, ground segments, and user segments is also now eligible for 100% FDI under automatic route.

The Indian government’s big leap towards liberalizing FDI regulations in the space sector is taken with the aim to incentivize potential investors to engage more with Indian companies operating in this field, fostering growth and innovation within the domestic space industry.

Elon Musk’s visit to India in late April is anticipated to coincide with several significant announcements, including the launch of Starlink services and investments totaling $2-$3 billion in the Indian market. Musk had previously applied for a permit to initiate Starlink operations in India, due to the constellation of 4,000 low Earth orbit satellites maintained by Starlink.

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During his visit, Musk is scheduled to meet with Prime Minister Narendra Modi and also engage with various tech startups, including Skyroot Aerospace, Dhruva Space, Piersight, Digantara, and Satsure, among others, in New Delhi. Musk’s interactions with these startups are expected to involve discussions about their technological innovations and the potential collaborations with SpaceX.