Foreign Exchange Management

Easing of foreign direct investment norms in the space sector

The union cabinet chaired by the prime minister of India, on February 21, 2024, approved the amendment in the Foreign Direct Investment (“FDI”) policy (“FDI Policy”) on space sector (“Amended Policy”). Under the existing FDI Policy, FDI is permitted in the establishment and operation of satellites only through government approval. The Amended Policy seek to liberalise the FDI Policy provisions in space sector by prescribing liberalised entry route and providing clarity for FDI in the space sector viz a viz satellites, launch vehicles and associated systems or subsystems. The liberalised entry routes under the Amended Policy are aimed to attract potential investors to invest in Indian companies in space and to encourage collaboration between public and private entities. The specific amendments to the FDI Policy and the Foreign Exchange Management (Non-Debt Instrument) Rules, 2019 are awaited.