The Indian government has recently revised the foreign direct investment (FDI) limits in the space sector under the Foreign Exchange Management Rules (FEMA)—a decision that could support Starlink’s India plans as CEO Elon Musk is slated to visit to India from April 21 to April 22.
What Are The Changes? Effective April 16, the new policy permits 100% FDI in the space sector, allowing complete foreign ownership in certain areas.
Previously, satellite manufacturing, operation, satellite data products, and ground and user segments had a 74% FDI cap. Now, these sectors have been fully opened up for FDI under the automatic route.
For the creation of spaceports, up to 49% FDI is permitted through automatic routes, with government approval required for investments beyond this threshold. Additionally, 100% FDI under the automatic route is allowed for manufacturing components and systems or sub-systems for satellites, the ground segment and the user segment.
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Why It Matters: These changes could help companies like Starlink, which owns more than half of all space assets, gain more direct and easier access to these segments of the satellite manufacturing process.
The government’s decision to liberalise the FDI rules aligns with the Indian Space Policy 2023 and aims to encourage foreign investors to invest in Indian space companies.
With the FDI rules eased, Indian space startups can work on expensive space projects and build their manufacturing and production capacity.
The Musk Factor: Musk’s visit is anticipated to bring several announcements, including the launch of Starlink services in India and investments worth $2 billion-$3 billion—mostly for setting up Tesla manufacturing plants in the country.
Musk has already applied for a permit to initiate Starlink services, which operates a constellation of 4,000 low-earth orbit satellites. During his visit, Musk is expected to meet with Prime Minister Narendra Modi and various tech startups in the space sector, including Skyroot Aerospace, Dhruva Space and others.
Musk will reportedly interact with startup founders to understand their innovations and technologies better. These startups will also have the opportunity to showcase their technologies to Musk.
Space tech startups are scheduled to meet with the Indian Space Promotion and Authorisation Centre (IN-SPACe) on April 17, where further details about Musk’s meeting with the space regulator will be discussed.
Starlink, a project by SpaceX, provides high-speed internet services via satellites and offers affordable rocket launches. Musk had previously attempted to launch Starlink in India in November 2022 for a GMPCS license.
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