Foreign Investment in Space Sector

The Department for Promotion of Industry and Internal Trade, Ministry of Commerce and Industry, government of India has revised the terms governing the foreign direct investment (“FDI”) policy of 2020 (“FDI Policy”) for the space sector in India, vide press note no. 1 (2024 Series) dated March 4, 2024 (“Press Note”).

Initially, para 5.2.12 of the FDI Policy allowed 100 per cent of FDI under the government approval route solely for satellite establishment and operations, subject to the sectoral guidelines of the Department of Space/ Indian Space Research Organisation (ISRO).

With an aim to streamline investment procedures in India and emphasizing various facets of the space sector, the press note has amended para 5.2.12 of the FDI Policy to align with the objectives set forth in the Indian Space Policy, 2023 by segregating the space sector into different sub-categories as follows:

In view of the sub-division of the sector, the press note has added the following definitions to provide more clarity:

a. Satellites-Manufacturing and Operation: End-to-end manufacturing and supply of satellite and/ or payload, establishing the satellite systems including control of in-orbit operations of the satellite and payloads.

b. Satellite Data Products: Reception, generation or dissemination of earth observation/ remote sensing satellite data and data products including Application Interfaces (API).

c. Ground Segment: Supply of satellite transmit/ receive earth stations including earth observation data receive station, gateway, teleports, satellite Telemetry, Tracking and Command (TIC) station, Satellite Control Centre (SCC) etc.

d. User Segment: Supply of user ground terminals for communicating with the satellite, which are not covered under the ground segment.

e. Launch Vehicles and Associated Systems or Subsystems: A vehicle, and its stages or components, that is designed to operate in or place spacecraft with payloads or persons, in a suborbital trajectory, earth orbit or outer space.

f. Creation of Spaceports for launching and receiving Spacecraft: A spaceport (also referred as launch site) that can be regarded as the base from which spacecraft is launched, and consisting of facilities involving devices for transportation to, from and via outer space.

g. Manufacturing of components and systems/ sub-systems for satellites, ground segment and user segment: Comprises of manufacturing and supply of the electrical, electronic, and mechanical components systems/ subsystems for satellites, ground segment and user segment.

Any investee entity is subject to sectoral guidelines issued by the Department of Space.

In recent years, the Indian space sector has seen progress by leaps and bounds which is evidence of the government of India’s confidence in the growth of the sector.

By introducing this press note, the government of India has introduced sectoral caps and entry routes in the space sector, thereby liberalising certain aspects of the space sector. This will help easy access to foreign investment and technology, boost manufacturing and promote commercial ventures and strengthen global relations.

About the authors: Vaishakh Kapadia is a Partner, Amishi Vira is a Senior Associate and Priya Shah is an Associate at ALMT Legal.

Disclaimer: This news flash has been written for the general interest of our clients and professional colleagues and is subject to change. This news flash is not to be construed as any form of solicitation. It is not intended to be exhaustive or a substitute for legal advice. We cannot assume legal liability for any errors or omissions. Specific advice must be sought before taking any action pursuant to this news flash. For further clarification and details on the above, you may write to exchangecontrol@almtlegal.com.