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regular-article-logo Saturday, 25 May 2024

Centre eases Foreign Direct Investment rules for satellites business

The notification by the finance ministry comes just days ahead of Elon Musk’s visit to India where he will reportedly meet Indian space companies

R. Suryamurthy New Delhi Published 18.04.24, 08:29 AM
Representational image.

Representational image. File Photo

The Centre has eased the rules on foreign direct investment (FDI) in the satellites business allowing 100 per cent FDI in some segments without any government approval.

The notification by the finance ministry comes just days ahead of Elon Musk’s visit to India where he will reportedly meet Indian space companies.

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The Tesla CEO is scheduled to visit India on April 21 and 22, with approvals almost in place for his satellite internet venture Starlink.

India is aiming for a five-fold increase in its share of the global satellite launch market, which is expected to be worth $47.3 billion by 2032. The country accounts for about 2 per cent of the space economy.

The FDI in the space sector has been classified into three categories: the first category allows up to 74 per cent FDI under the automatic route for the manufacture of satellites and satellite data products.

In this category, beyond 74 per cent FDI would be cleared by the central government.

The second category of FDI relates to launch vehicles and spaceports for launching and receiving spacecraft.

FDI not more than 49 per cent will be allowed through the automatic route for the vehicles and spaceports and their components. Government approval will be necessary for FDI beyond 49 per cent.

In the third category, the ministry has notified 100 per cent FDI under the automatic route for the manufacturing of components for satellites.

Previously, FDI in the sector was permitted in the establishment and operation of satellites through the government approval route only.

Starlink is a division of SpaceX, which provides high-speed internet access globally using a constellation of thousands of satellites in low-earth orbit. This service is particularly beneficial in rural and remote areas where broadband internet or fibre-based internet is not available.

Starlink’s rivals OneWeb, backed by Bharti Airtel’s Sunil Mittal, and Jio have already obtained satellite licenses.

The Telecom Regulatory Authority of India is expected to give its suggestions on spectrum allocation and pricing for satellites.

The foreign direct investment policy reform is expected to boost employment and will allow companies to set up manufacturing facilities in India.

“This will give India access to the latest tech advances and much-needed funds, not only from the country but from international investors too,” said A.K. Bhatt, director-general of the Indian Space Association.

The Centre has announced a new space policy in 2023, and has allocated Rs 13,043 crore to the segment in the interim budget.

The relaxation of FDI norms and laying the groundwork for foreign participation is a positive move and is expected to make the sector more attractive in the eyes of the foreign investors, analysts said.

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