FDI
IN SPACE SECTOR - ECONOMY
News:
100% FDI to be allowed in
space sector: Centre
What's
in the news?
●
Recently, the Union Cabinet has approved
100% Foreign Direct Investment (FDI) in the space sector, under the revised FDI
policy.
Key
takeaways:
●
The liberalised entry routes under the
amended policy are aimed to attract potential investors to invest in Indian
companies in space.
New
Changes in Foreign Direct Investment (FDI) Norms:
Under the updated FDI
policy, the satellite sub-sector has been divided into three different types,
with defined limits for foreign investment in each type.
1.
Manufacturing of components and systems/sub-systems for satellites, ground
segment, and user segment - under the Automatic route, FDI of
up to 100% will be permitted.
●
Until now, foreign investment in this
sub-sector was only permitted up to 100 percent through the government route.
2.
Satellite manufacturing and operation, satellite data products, and ground/user
segment – the updated policy allows up to 74% FDI under the automatic route. For
investments beyond 74%, government approval is required.
3.
Launch vehicles and their components – up to 49% FDI under the automatic route will
be allowed. Investments beyond 49% will require government approval.
Significance:
●
The revised policy aims to attract
investors to invest in Indian space companies.
●
It will boost the Indian space sector
growth, as the Indian space economy is expected to increase from approximately
$8.4 billion now to $44 billion by 2033.
●
The increased private sector involvement
will create jobs, facilitate the adoption of modern technology and promote
self-sufficiency in the sector.
●
The revised policy is expected to link
Indian firms with global supply chains, allowing them to set up manufacturing
plants locally.
Go
back to basics:
Foreign
Direct investment Investment (FDI):
●
It refers to investments made by foreign entities in businesses or corporations
located in another country.
●
This can take the form of either
establishing business operations or acquiring business assets in the other
country, such as ownership or controlling interest in a foreign company.
Routes
of FDI in India:
1.
Automatic Route:
●
Under the Automatic Route, neither the
foreign investor nor the Indian company needs approval from the Government of
India for the investment.
2.
Government Route:
●
Approval from the Government of India is
necessary before making an investment. Proposals for FDI under this route are
reviewed by the respective Administrative Ministry/Department.
FDI
Prohibited Sectors in India:
●
Real Estate Business
●
Gambling and Betting
●
Chit Funds
●
Nidhi Company
●
Trading in Transferable Development Rights
(TDR)
●
Manufacturing of Tobacco Products
●
Sectors
not open to Private Sector Investment - includes atomic energy
and railway operations except for activities allowed under the Consolidated FDI
policy
●
Lottery
Business - including government or private lotteries, and
online lotteries.