INDIA Trends and Developments Contributed by: Anand Lakra, Shivpriya Nanda, Zain Pandit and Ami Shah, JSA Advocates & Solicitors
Prior approval route FDI in areas or activities or sectors which do not fall within the automatic route or where the pro - posed FDI exceeds the specific sectoral caps requires prior approval of the GoI through the competent authority. Further, investment beyond prescribed thresh - olds in certain specific sectors of strategic importance, including broadcasting, aviation, publishing, defence production, telecoms and railway infrastructure, is subject to guidelines issued by relevant ministerial departments and also requires the prior approval of the competent authority. To facilitate investments, the GoI has introduced the Foreign Investment Facilitation Portal and National Single Window System as a single point interface for the online filing of applications and procuring pre-establishment and pre-operation approvals and permits required to establish a business in India. When a proposal for FDI is accorded approval by the competent authority, permission is granted for such proposal in the form of an approval letter. The terms and condi - tions of the approval letter are binding both on the investing foreign company as well as on the Indian investee company. Subject to any specific terms of the approval letter, upon securing the competent authority approval, the Indian inves - tee may then arrange to receive the investment without having to secure any further approvals from the Reserve Bank of India (RBI). Trends and Developments Liberalisation in the space sector In 2023, the GoI announced the Indian Space Policy, 2023, which was, in essence, its vision for reforming the space sector in India. Putting policy into action, on 21 February 2024, the Union Cabinet of the GoI approved amendments
which would liberalise FDI in the space sector (the “Amended Policy” ). Under the previous pol - icy, FDI was permitted in the establishment and operation of satellites through the prior approval route only. The Amended Policy not only pre - scribes liberalised entry routes but also provides some much-needed clarity for FDI in the space sector in relation to satellites, launch vehicles and associated systems or subsystems. The lib - eralised entry routes under the Amended Policy are aimed to attract potential investors to invest in Indian companies in the space sector and to encourage collaboration between public and pri - vate entities. The entry routes for various sub-sectors/activi - ties under the Amended Policy are as follows. • Up to 74% under the automatic route: satel - lite manufacturing and operation, satellite data products and ground segment and user segment. FDI beyond 74% would fall under the prior approval route. • Up to 49% under automatic route: launch vehicles and associated systems. FDI beyond 49% would fall under the prior approval route. • Up to 100% under automatic route: for activi - ties involving the manufacture of compo - nents and systems/subsystems for satellites, ground segment and user segment. Streamlining the “reverse flip” Recognising the interest shown by foreign-domi - ciled but India-focused start-ups in “reverse flip - ping” their holding back to India, a regulation was introduced in late 2024 to simplify the pro - cess and remove regulatory roadblocks. The Ministry of Corporate Affairs (MCA), vide notification dated 9 September 2024, intro - duced a significant development in reverse flip - ping regulations under the Companies (Com -
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