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Indian finance ministry notifies 100% FDI for satellites ahead of Elon Musk’s India visit

The Ministry of Finance, led by Nirmala Sitharaman, has notified new Foreign Direct Investment (FDI) regulations for satellites within the Foreign Exchange Management Rules to increase foreign entities’ investment in satellite-related activities.

This development follows the Union Cabinet’s recent approval of a policy to liberalize foreign investments in the space sector.

Under these new guidelines, foreign investors can now invest up to 100 percent of FDI in the sector, with 74 percent under the automatic route. This includes satellite manufacturing and operations investments, the ground and user segments, and satellite data products.

Notably, this notification arrives just days before Elon Musk’s anticipated visit to India. Musk is reportedly scheduled to meet with various Indian space companies from April 21 to 22. Concurrently, approvals for Musk’s satellite internet project, Starlink, are nearing finalization.

The Finance Ministry’s notification, named the Foreign Exchange Management (Non-Debt Instruments) (Third Amendment) Rules, 2024, came into effect on April 16.

Under these updated regulations, foreign investors are now permitted to invest up to 100 percent under the automatic route in manufacturing satellite components, systems, or subsystems, as well as for the ground segment and user segment.

Additionally, up to 49 percent FDI under the automatic route is now allowed for launch vehicles, associated systems or subsystems, and the establishment of spaceports. However, investments beyond this threshold will necessitate government approval.

The notification also emphasizes that the investee entity must adhere to sectoral guidelines issued by the Department of Space. Previously, FDI within the sector was confined to establishing and operating satellites, requiring government approval.

These regulatory updates signal the Indian government’s intent to attract more excellent foreign investment and expertise into the space sector. The government aims to foster innovation, technological advancements, and economic growth within the satellite industry by liberalizing FDI limits and streamlining approval processes.

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