Govt. Allows 100% FDI Under Automatic Route for Manufacturing of Components, Systems or Sub-systems for Satellites

Notification No. S.O. 1722(E), Dated: 16.04.2024

The Ministry of Finance has notified the Foreign Exchange Management (Non-debt Instruments) (Third Amendment) Rules, 2024. An amendment has been made to Schedule I of the existing rules, allowing 100% FDI under the automatic route for satellite component manufacturing and FDI up to 74% under the automatic route for satellite manufacturing and operations. The amendments are effective from April 16, 2024. The amendments are discussed hereunder-

1. 100% FDI is allowed under automatic route for satellite component manufacturing

As per the amended norms, 100% FDI is allowed under the automatic route for the manufacturing of components, systems or sub-systems for satellites, ground segments and user segments.

2. FDI up to 74% is allowed under automatic route for satellite manufacturing and operations

The Ministry of Finance has allowed FDI up to 74% under the automatic route for satellite manufacturing and operations, satellite data products and ground and user segments. However, FDI beyond 74% is allowed via the government approval route only.

3. FDI up to 49% is allowed under automatic route for launch vehicles, associated systems and spaceport creation

Additionally, FDI up to 49% is allowed under the automatic route for launch vehicles and associated systems or sub-systems as well as the creation of spaceports for launching and receiving spacecraft. However, FDI beyond 49% is allowed via the government approval route only.

Further, the investee entity must be subject to sectoral guidelines as issued by the Department of Space from time to time.

Prior to this amendment, FDI was permitted in the establishment and operation of satellites under the Government approval route only.

These measures represent a proactive approach towards positioning India as a key player in the global space industry while ensuring adherence to sectoral guidelines. By allowing 100% FDI under the automatic route for satellite component manufacturing in India, the Government aims to strengthen domestic manufacturing capabilities, thereby fostering innovation and growth within the space sector.

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