The Finance Ministry has announced new foreign direct investment limitations under the Foreign Exchange Management Rules for satellite-related industries, allowing foreign investors to finalize their investment plans in the sector.

The move follows the Union Cabinet's approval of a strategy to liberalize foreign investment in the space sector in February this year.

This allows for up to 100% FDI in the sector, with 74% going through the automated route for satellite production and operations, ground and user segments, and satellite data products. 

The finance ministry's notification comes just days before Elon Musk's scheduled visit to India, where he is expected to meet with Indian space companies. The Tesla CEO plans to visit India on April 21 and 22. Starlink, his satellite internet business, is also nearing approval.

According to a statement from the Finance Ministry, the revised Foreign Exchange Management (Non-debt Instruments) (Third Amendment) Rules, 2024, will take effect on April 16. 

Up to 100% FDI via the automatic route is now permissible for the production of satellite components, systems, or subsystems, as well as the ground and user segments. FDI up to 49% under the automatic route is now permissible for launch vehicles and associated systems or subsystems, as well as the development of spaceports for launching and receiving spacecraft, but government clearance is required above this amount.

"The investee entity shall be subject to sectoral guidelines as issued by the Department of Space from time to time," according to the notice. Previously, FDI in the sector was only permitted for the establishment and operation of satellites with government clearance.