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fdi: Inter-ministerial discussion under way to ease FDI norms in space sector: Official

An inter-ministerial discussion is going on to further liberalise foreign direct investment norms in the space sector to attract overseas players and private companies, a top government official has said. The official said that there is huge scope for foreign companies to invest in India in this fast growing sector.

The proposal to ease foreign direct investment (FDI) norms in the space sector is “under inter-ministerial discussion,” the official added.

However, the official did not disclose further details.

Presently, FDI in the space sector is allowed up to 100 per cent in the area of satellite establishment and operations through government routes only.

After the touchdown by ISRO’s Chandrayaan-3 spacecraft near the moon’s South pole, three G-20 countries have expressed interest in possible collaborations or partnerships with India in the space sector.

In April, the government approved the Indian Space Policy 2023, which seeks to institutionalise private sector participation in the space sector, with ISRO focusing on research and development of advanced space technologies. The Indian Space Policy-2023 also delineated the roles and responsibilities of ISRO, space sector PSU NewSpace India Limited (NSIL) and Indian National Space Promotion and Authorization Center (IN-SPACe). As per estimates by different reports, the global space economy is valued at about USD 546 billion in 2022 and is projected to reach about $1 trillion by 2040. The reports have stated that the growth will be driven by cost reduction efforts, and technological advancements.

According to a Deloitte-CII report, the Indian space economy comprises a long value chain, starting with Research and Development (R&D) outfits and manufacturers of space hardware and ending with providers of space-enabled products and services to consumers that enable technology, business, and governance propositions.

As per the report, while the Indian government has started to provide tax impetus to the space sector, it needs to take more initiatives for tax exemptions/tax holidays/accelerated depreciation for companies directly or indirectly engaged in space sector activities, so that the benefits are available to the entire value chain and there is no embedded tax cost.

“Within the space industry, governments often serve as the initial customers for numerous startups, while also acting as stable clients for companies engaged in strategic space and national security initiatives.

“To enhance investor interest in the space sector, space agencies are fostering capital inflow, with companies securing government contracts, offering a sense of assurance to potential investors,” the report has said.

It has added that there is a need for creating sustainable market demand for the private startups, which in turn contributes to the establishment of a robust private space ecosystem in India.

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