Space stocks soar up to 7% on approval for 100% FDI in space sector

During early morning trading today, shares related to the space sector surged by up to 7% following the approval of amendments to the Foreign Direct Investment (FDI) policy by the Union Cabinet on Wednesday.

The policy alteration aims to attract overseas players and private companies to participate in the space segment. This decision was made during a Cabinet meeting chaired by Prime Minister Narendra Modi.

According to a government press release, the amendment divides the satellite sub-sector into three distinct activities, each with defined limits for foreign investment. The revised FDI policy now allows 100% FDI in the space sector, with liberalized entry routes aimed at attracting potential investors to invest in Indian space companies.

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This development has already translated into market gains, with MTAR Technologies witnessing a notable 7.19% surge in today’s intraday trade.

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Similarly, stocks of Apollo Micro Systems, Walchandnagar Industries, Paras Defence and Space Technologies, Data Patterns (India), Bharat Electronics, Centum Electronics, and Zen Technologies are currently trading with gains ranging from 1% to 4%.

The government’s press release highlighted that the liberalized FDI thresholds are in line with the vision and strategy outlined in the Indian Space Policy 2023. Previously, FDI was allowed in the establishment and operation of satellites only through the government approval route.

In a significant move, the manufacturing of components and systems/sub-systems for satellites, ground segments, and user segments allows up to 100% FDI under the automatic route, allowing full foreign ownership without requiring government approval.

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The government’s proposed reforms aim to liberalize FDI policy provisions in the space sector, providing clarity and a liberalized entry route for FDI in various space-related activities.

These reforms align with the government’s commitment to boost the space industry, supported by the recent Chandrayaan-3 Moon landing success and increased allocations to the sector. The growth in launch services and the satellite internet market has further fueled the positive sentiment in the space-related stocks.

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