As per the existing Consolidated Foreign Direct Investment Policy (‘FDI Policy’), foreign direct investment (‘FDI’) is permitted under the Government Route, only for establishment and operation of Satellites. However, the Government of India on December 20, 2023, had launched the Indian Space Policy, 2023 in an attempt to increase private participation in the space sector. Accordingly, the Indian Space Policy, 2023 enables end-to-end participation of non-Government entities in all domains of space activities. Thus, in alignment with the strategy of the Indian Space Policy, 2023 and in an aim to enhance ease of doing business in the country, the FDI Policy has been liberalized to attract potential investors to invest in Indian space companies.

Pursuant to Press Note No. 1 of 2024, issued by the Government of India on March 4, 2024, 100 percent FDI is allowed in the space sector as specified below:

i.    For activities pertaining to satellite manufacturing and operations, satellite data products and ground segment & user segment, up to 74 percent FDI is permissible under the automatic route. Beyond this threshold, FDI is permitted under the Government Route;

ii.   For activities pertaining to launch vehicles and associated systems or subsystems, creation of spaceports for launching and receiving spacecraft, up to 49 percent FDI is permissible under the automatic route. Beyond this threshold, FDI is permitted under the Government Route; and

iii.  In relation to manufacturing of components and systems/ sub-systems for satellites, ground segment and user segment, 100 percent FDI is permitted under the automatic route.

The investee entity will be subject to the guidelines issued by the Department of Space from time to time in relation to these activities.

The changes specified above have been made effective from April 16, 2024 pursuant to notification of the Foreign Exchange Management (Non-debt Instruments) (Third Amendment) Rules, 2024 by the Reserve Bank of India (‘RBI’).