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Source: The post new FDI rules in India’s space sector has been created, based on the article “Express View on FDI in space: Opening up” published in “Indian express” on 19th April 2024.
UPSC Syllabus Topic: GS Paper 2- governance-Government policies and interventions for development in various sectors and issues arising out of their design and implementation.
News: The article discusses India’s new foreign direct investment (FDI) rules aimed at enhancing its space industry. These rules increase FDI limits for various space-related activities. The changes are part of India’s broader strategy to strengthen its position in the global space economy.
For details information on Indian Space Policy read Article 1, Article 2
What are the new FDI rules in India’s space sector?
India has updated its FDI policy to boost its space sector:
74% FDI is now permitted under the automatic route for satellite manufacturing and data products.
49% FDI is allowed for launch vehicles and spaceports.
Up to 100% FDI is possible for manufacturing components required by the space sector.
Why is this change significant?
Enhancing Global Standing: The new FDI rules aim to position India as a major player in the global space market. India currently holds 2-3% of this market, with aspirations to increase this share to over 10% by 2030. According to Indian National Space Promotion and Authorisation Centre (IN-SPACe), an investment of $22 billion is projected over the next ten years to meet these growth targets.
Private Sector Engagement: By allowing higher FDI limits, India is encouraging private companies to participate more actively. For instance, Skyroot Aerospace’s launch of a privately built rocket demonstrates the potential and capabilities of private entities under this new policy framework.
Development of Infrastructure: The allowance of up to 49% FDI in spaceports is particularly significant as it opens up opportunities for private investment in critical infrastructure, which is currently operated by ISRO.
Alignment with National Objectives: The policy changes align with India’s broader strategic goals, enhancing space capabilities and supporting national security and development objectives. These initiatives include using advanced space technology for agriculture and climate change mitigation.
What should be done?
Expand ISRO’s role in R&D, aligning with the Space Policy to encourage both public and private sector contributions.
Focus on regulatory clarity, such as specifying FDI limits in new segments like spaceports, to attract foreign investments and partnerships.
India’s space economy now requires a proper mix of government regulation and freedom for the market.
Question for practice:
Discuss the significance of India’s new foreign direct investment (FDI) rules in the space sector and how they align with the country’s broader strategic goals.
