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In a significant shift, the Indian government has announced a new policy for foreign investment (FDI) in the space sector. This policy balances the need to attract much-needed investment with national security concerns.

Under the new guidelines, announced on March 5th, foreign companies can now invest:

100% in making components for satellites.
Up to 74% in manufacturing and operating satellites.
Up to 49% in building and launching rockets.

Investments exceeding these limits will require government approval.

This move aims to address the sluggish foreign investment in India’s space program in recent years. Experts attribute this slowdown to global economic issues.

However, the government is taking a cautious approach. Dr. Jayant Patil of Larsen & Toubro highlights the dual-use nature of launch vehicles, which can be similar to intercontinental ballistic missiles (ICBMs). He emphasizes that the FDI policy aligns with existing defense ministry restrictions, which also limit foreign investment in this area to 49%. Additionally, launch vehicles fall under international regulations (MTCR) that prevent unrestricted foreign control over such technology.

Maneck Behramkamdin of Godrej Aerospace agrees. He sees the varied FDI limits across different space sectors as a reflection of strategic considerations. These considerations include the importance, complexity, and security risks associated with each area. This approach aims to attract investment while safeguarding national interests.