FDI in space sector expected to spur industrial growth in southern districts

100% FDI in space sector to boost investments around ISRO's Kulasekarapattinam spaceport, transforming industrial landscape in Tamil Nadu.

The Central government’s decision to allow 100% Foreign Direct Investment (FDI) in certain areas of space sector under ‘Atmanirbar Bharat’ programme is expected to act as a catalyst to bring investments around Indian Space Research Organisation’s upcoming Kulasekarapattinam spaceport in Thoothukudi district.

The Union Cabinet chaired by Prime Minister Narendra Modi on Wednesday has approved the amendment in FDI policy to unlock India’s potential in space sector through increased private participation. 

 As per the existing policy, FDI is permitted in fabrication and operation of satellites only through government-approved route. In line with the vision and strategy under the Indian Space Policy 2023, the Union Cabinet, following discussion with stakeholders, has eased the FDI policy on space sector by prescribing liberalised FDI thresholds for various sub-sectors or activities. With increased investments, Indian space agencies would be able to achieve sophistication of products, global scale of operations and increased share of global space economy, officials associated with space agencies say.

 The proposed reforms will faciliate liberalised entry and provide clarity for FDI in satellites, launch vehicles and associated systems or subsystems, creation of spaceports for launching and receiving spacecraft and manufacturing of space-related components and systems.

FDI will be allowed in satellite manufacturing and operation, satellite data products and ground segment (up to 74%), launch vehicles and associated systems or subsystems, creation of spaceports for launching and receiving spacecraft (up to 49%). and 100% in manufacturing of components and systems / sub-systems for satellites, ground segment and user segment.

 “Increased private sector participation will generate jobs, enable modern technology absorption and make the sector self-reliant. It is expected to integrate Indian companies into global value chains. With this, companies will be able to set up their manufacturing facilities within the country,” the officials say.

The ISRO faciclity at Kulasekarapattinam will trigger massive industrial growth in Thoothukudi and Tirunelveli districts if the Tamil Nadu government makes efforts to attract FDI in space sector. The upcoming industrial complex by SIPCOT at Allikulam near Thoothukudi is expected to house mostly companies fabricating components for space systems, as recently revealed by Managing Director of SIPCOT K. Senthil Raj. “If things go well, the landscape of Thoothukudi and Tirunelveli districts will be transformed within the next 20 years,” Mr. Senthil Raj told The Hindu.