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100 % FDI In Space Sector

100 % FDI In Space Sector:

The Finance Ministry has notified amended rules under the Foreign Exchange Management Act to operationalise its earlier decision to allow up to 100 per cent foreign direct investment (FDI) for the space sector. The new rules came into effect from April 16.

  • The Union Cabinet had approved the amendment to the FDI policy for the space sector, allowing up to 100 per cent investment in certain categories.
  • As per the latest Finance Ministry notification, 100 per cent FDI has been allowed for the space sector category of manufacturing and operation of satellites, satellite data products, and ground segment and user segment, out of which up to 74 per cent would be through the automatic route and government nod would be required for investment beyond 74 per cent.
  • Under the earlier policy, any foreign investment in manufacturing and operating satellites is allowed only with government approval.
  • Manufacturing of components and systems or sub-systems for satellites, ground segment and user segment will be fully under the 100 per cent automatic route.
  • Automatic FDI has also been permitted up to 49 per cent for launch vehicles and associated systems or subsystems, and creation of spaceports for launching and receiving spacecraft. Government approval would be required for investments beyond 49 per cent.
  • The notification dated April 16 comes ahead of Tesla chief Elon Musk’s visit to India early next week where he is expected to meet space startups, make a push for his space venture Starlink’s plans and announce his electric vehicle (EV) investment plans.

About FDI:

  • Foreign Direct Investment (FDI) is defined as an investment in which a company takes controlling ownership of a business entity in another country.
  • Therefore, foreign companies get directly involved with day-to-day operations in other countries.
  • India gets FDI through two routes:
    • (a) Automatic route: Under this route, the non-resident or Indian company does not require a prior nod from the Reserve Bank of India (RBI) or the government of India for FDI.
    • (b) Government route: Under this route, the government’s approval is mandatory.
  • The company will have to apply through Foreign Investment Facilitation Portal, which facilitates single-window clearance.