NDI Amendment Rules: New Entry Routes for Space Sector Notified

On April 16, 2024, the Finance Ministry notified the Foreign Exchange Management (Non-debt Instruments) (Third Amendment) Rules, 2024, prescribing new entry routes for foreign investment in activities under the space sector.

An amendment to the Foreign Direct Investment (FDI) Policy in this regard was made last month after the Union Cabinet gave its nod (click here to read our blog post on the subject). The same became operative w.e.f. the date of notification of the 2024 Amendment Rules.

Changes have been made to Schedule I of the 2019 Rules, liberalizing the entry routes for foreign investment in specified space sector-related activities. Accordingly, foreign investment in activities including a) satellites – manufacturing and operation, b) satellite data products, and c) ground segment and user segment, is permitted via automatic route up to 74%. Beyond the said limit, government approval has to be taken.  

When it comes to a) launch vehicles and associated systems or subsystems, and b) creation of spaceports for launching and receiving spacecraft, foreign investment is permitted via the automatic route up to 49% and the government route beyond 49%.  In the manufacturing of components and systems or sub-systems for satellites, ground segment and user segment, foreign investment is permitted up to 100% through the automatic route.

The sectoral cap for these activities, however, remains at 100%. Further, the activities have been defined in the amended FDI Policy and NDI Rules. It is also specified that the investee entity will be subject to sectoral guidelines as issued by the Department of Space from time to time.