India may allow 100% FDI for satellite broadband players

India may allow 100% FDI for satellite broadband players

The Indian government is reportedly set to classify satellite broadband as a telecoms service, which would make global satellite broadband players eligible for 100% foreign direct investment (FDI) automatically.

According to a report in ETTelecom, citing lawyers and senior satellite industry executives, such a move would make it easier for operators like SpaceX’s Starlink and Amazon’s Kuiper to offer services in India without having to rope in a local partner.

The report comes as the Ministry of Commerce and Industry issued amended rules for the space sector on Tuesday, which say that companies involved in “manufacturing or operation of satellites, or generation and/or dissemination of earth observation/remote sensing satellite data and data products” will automatically qualify for only 74% FDI. Such companies would need government approval to increase FDI to 100%.

However, because the amended rules don’t mention satellite broadband services, industry experts believe those will likely be allowed to have 100% FDI – the same as terrestrial telecoms service providers.

Anirudh Rastogi, managing partner at Ikigai Law, told ETTelecom that global satellite broadband providers should fall under the 100% automatic investment route for telecoms “to the extent that they are only providing broadband services, and not falling within any other activities listed in the [space sector FDI] amendments.”

A K Bhatt, director general of Indian Space Association (ISpA), agrees with this assessment, and told the publication that he expects the Department for Promotion of Industry & Internal Trade (DPIIT), the Department of Telecommunications (DoT) and the Department of Space (DoS) to clarify the rules soon.

“We are waiting for DoT and DoS to clarify this, but if this is indeed the case, it will help India attract big-bang investments from global satellite broadband players,” he said.

Experts said that clarifying FDI rules for satellite broadband services would encourage investors who see high growth potential in India’s fledgling satellite communications market.

Indian National Space Promotion and Authorisation Centre (IN-Space) has forecast the Indian satellite market to be worth up to US$40 billion by 2033 and account for 8% of the global market, up from 2% now.

For several years now, satellite broadband players like Starlink, Kuiper, Telesat and Eutelsat OneWeb (which is partly backed by Bharti) have been keen to launch services in India to help connect underserved and unserved areas. However, service launches have been delayed by red tape and – more crucially – acquiring the necessary spectrum licences, which the DoT has yet to offer.

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