Hail Musk but don’t miss out on other crucial FDI proposals

The government has exhibited a proactive attitude by notifying amendments to the FDI policy in the space sector, especially days ahead of the visit of Tesla CEO Elon Musk. The notification is intended to attract overseas investors in satellite manufacturing and satellite launch vehicles segments. It not only liberalizes the entry route but also provides clarity for FDI in the sector. The complete silence of the FDI opponents, many of whom are members of the saffron family, is quite baffling. Not long ago, they were vociferous in opposing any relaxation in the FDI policy and the entry of big multinational corporations; they would talk about domestic companies being swept aside by MNCs; they complained about the imperative of a ‘level-playing field’; long was the list of their litanies. But no longer, it seems. This is perhaps because the Narendra Modi government is working fast to finalize the prerequisite approvals for Musk’s satellite internet project, Starlink. The ambit of the new notification is vast and allows up to 74 per cent FDI for satellite manufacturing and operation, satellite data products and ground segment and user segment through the automatic route. Moreover, only beyond 74 per cent of these activities require government clearances.

For launch vehicles and associated systems or subsystems, creation of spaceports for launching and receiving spacecraft, 49 per cent FDI is allowed under automatic route; more than that would require government permission. As regards the manufacture of components and systems/sub-systems for satellites, ground segment and user segment, the FDI regime has been opened up completely, through the automatic route. Needless to say, the recently announced changes in the FDI policy are intended to woo Musk, one of the richest men in the world. It should be noted that a year ago, Apple CEO Tim Cook visited India amid considerable fanfare. The Apple ecosystem has reportedly created over 150,000 direct jobs since the start of the production-linked incentive (PLI) scheme for smartphones in August 2021. Apple is also said to be planning to partner with the Murugappa Group and Titan of the Tata Group to manufacture iPhone camera sub-components.

Hopefully, Musk’s visit will also pave the way for an equally vibrant ecosystem that will benefit Indian economy and his business.

An interesting aspect of his visit is that it is being made during the peak of election campaigning. In this period, normally the party in power doesn’t want to get distracted from the intricacies of poll canvassing, but the Modi government is so confident of retaining power that it has not let the general election to come in the way of economic policy and decision making. This is good. The same, however, cannot be said about the bureaucrats in many economic ministries. A recent media report said that the Department for Promotion of Industry and Internal Trade has written to 17 government departments to expedite decision-making on 46 FDI proposals that await government clearance and have breached the government-mandated 12-week time limit for grant of approval. The government must ensure that officials are enthusiastic about all FDI proposals, including those which don’t enjoy Musk’s glamour or power.