FDI in the Space Sector: Impacts, and Future Prospects UPSC

FDI IN THE SPACE SECTOR

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Context

The Finance Ministry has issued amended rules under the Foreign Exchange Management Act to implement its decision allowing up to 100 per cent FDI in the space sector.

Categories for Liberalized Entry Routes:

Manufacturing and Operation of Satellites:

100 per cent FDI allowed for manufacturing and operation of satellites, satellite data products, ground segment, and user segment.
Up to 74 per cent permitted through automatic route; government approval required beyond 74 per cent.

Launch Vehicles and Associated Systems:

Automatic FDI permitted up to 49 per cent for launch vehicles, associated systems or subsystems, and creation of spaceports.
Government approval mandated for investments exceeding 49 per cent.

Automatic Route for Manufacturing:

Manufacturing of components, systems, or sub-systems for satellites, ground segment, and user segment falls fully under the 100 per cent automatic route.

Sectoral Guidelines:

Investee entities are subject to sectoral guidelines issued by the Department of Space periodically.

Commencement Date:

The new rules, effective from April 16, seek to streamline investment procedures in the space sector.

KEY DEFINITIONS

Definition of Satellites – Manufacturing and Operation:

Involves end-to-end manufacturing and supply of satellites or payloads, including control of in-orbit operations.

Definition of Satellite Data Products:

Encompasses reception, generation, or dissemination of earth observation or remote sensing satellite data and data products, including Application Interfaces (API).

Ground Segment:

Includes supply of satellite transmit or receive earth stations, such as earth observation data receive stations, gateways, teleports, Satellite Telemetry, Tracking, and Command (TTC) stations, and Satellite Control Centers (SCC).

User Segment:

Involves supply of user ground terminals for communicating with satellites, excluding ground segment components.

Definitions of Launch Vehicles and Spaceports:

Launch Vehicles and Associated Systems or Sub-Systems:

Encompasses vehicles, stages, or components designed for placing spacecraft with payloads in sub-orbital trajectory, earth orbit, or outer space.

Spaceport:

Refers to the base from which spacecraft are launched, comprising facilities for transportation to, from, and via outer space.

Overview of Space Activities:

Key Components:

Launch vehicles and services, satellites, ground stations, and user products utilizing satellite data.

PRACTICE QUESTION

Q. Analyze how involving the private sector can benefit innovation and technology in the space industry while maintaining national security. Outline the challenges and strategies needed for successful private participation.

SOURCE: INDIAN EXPRESS