100% FDI to be allowed in space sector: Centre.

Syllabus: GS-III

Subject: Economy

Topic:  Investment models

Issue: Foreign Direct Investment

Context: The Union Cabinet took the decision to amend the existing Foreign Direct Investment (FDI) policy on the space sector.

Synopsis:

• Out of the 100% FDI, up to 74% FDI is under the automatic route and beyond it under the government route.

Aims:

• To attract potential investors to invest in Indian companies in space.
• Increased private sector participation would help to generate employment.
• To enable modern technology absorption and make the sector self-reliant.
• Integrate Indian companies into global value chains.

+1 Advantage

Foreign Direct Investment (FDI):

It refers to an investment made by a company or individual of one country into business interests locate d in another country.

Key characteristics of FDI:

1. Controlling ownership of a business entity.
2. Typically a long-term
3. Substantial investment – significant amount of money.

India gets FDI through two routes:

• Automatic route: Under this route, the company does not require a prior approval from the RBI or the government of India.
• Government route: Under this route, the government’s approval is mandatory.