Space-related stocks surged by up to 7% in early morning trading today following Wednesday's Union Cabinet's approval of amendments to the Foreign Direct Investment (FDI) policy for the space sector.

The move aims to attract overseas players and private companies to participate in the space segment.

Amendments to FDI Policy

The Union Cabinet's decision to amend the FDI policy for the space sector has divided the satellite sub-sector into three distinct activities, each with defined limits for foreign investment. According to a government press release, the amended policy allows for 100% FDI in the space sector, with liberalized entry routes to attract potential investors.

Specific Entry Routes

Under the amended policy, specific entry routes have been introduced for various sectors within the space industry. For activities such as satellite manufacturing and operation, satellite data products, ground segmentation, and user segment, up to 74% of FDI is permissible under the automatic route. Investments exceeding 74% in these activities require government approval.

Similarly, the automatic route allows up to 49% FDI in launch vehicles and associated systems or subsystems, creating spaceports for launching and receiving spacecraft. Investments exceeding 49% in these sectors necessitate government approval.

According to Live Mint, full foreign ownership without government approval is permitted to manufacture components and systems/subsystems for satellites, ground segments, and user segments, with up to 100% FDI allowed under the automatic route.

Government's Objective

The proposed reforms seek to liberalize FDI policy provisions in the space sector by prescribing a liberalized entry route and providing clarity for FDI in various sub-sectors and activities related to satellites, launch vehicles, and associated systems or subsystems.

Impact on Stocks

Following the approval of the amendments, MTAR Technologies witnessed a 7.19% surge in today's intraday trade.

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

These stocks have been consistently rising, fueled by factors such as the successful Chandrayaan-3 Moon landing, increased government funding for the space industry, expansion of launch services, and growth in the satellite internet market.

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