India has eased regulations to permit 100% foreign direct investment (FDI) in the space sector, aiming to encourage investment.
During Thursday's trading session, attention was focused on shares of defense and aerospace-related companies such as MTAR Technologies, IdeaForge Technology, Bharat Heavy Electricals (BHEL), Mishra Dhatu Nigam (Midhani), and others following the Union Cabinet's approval of amendments to the foreign direct investment (FDI) policy in the space sector on Wednesday.
According to a government notification on Wednesday, India has eased regulations to permit 100% foreign direct investment (FDI) in the space sector with the aim of promoting investment. The satellite sub-sector has been divided into three distinct activities, each with defined limits for foreign investment, as stated in the release by the Government of India.
After the announcement, Mishra Dhatu Nigam Ltd (Midhani) shares rose approximately 9% to Rs 438.95 on Thursday, surpassing its previous close. Similarly, MTAR Technologies Ltd also saw significant gains, climbing about 9% to Rs 2,065 compared to its previous close at Rs 1,900.55.
Under the revised FDI policy, 100% FDI is permitted in the space sector, following a decision made at a Cabinet meeting chaired by Prime Minister Narendra Modi. The government, in its press release, stated that the relaxed entry routes introduced in the amended policy aim to attract potential investors to invest in Indian space companies.
In addition to other stocks, Apollo Micro Systems Ltd surged by about 5% to Rs 128.95 in the opening trade, while Paras Defence and Space Technologies Ltd rose by approximately 4% to Rs 754.40. Data Patterns (India) Ltd also saw an increase of over 3% to Rs 2118 in early trading.
Bharat Heavy Electricals Ltd (BHEL) and Ideaforge Technology Ltd witnessed a 2% increase each, reaching Rs 226.70 and Rs 741.70, respectively. Among smaller peers, Taneja Aerospace & Aviation Ltd and NIBE Ltd also experienced gains of up to 2-3% each.
According to Atul Parakh, CEO at Bigul, a discount broker, the Indian government's decision to allow 100% FDI in the space sector aims to attract global investment, bolster the private space industry, and enhance capabilities in space exploration and satellite technology. He states, "This move is intended to achieve product sophistication on a global scale and increase India's share in the global space economy."
India's Information Technology Minister, Ashwini Vaishnaw, recently stated that the country is targeting $100 billion in annual foreign direct investment (FDI) over the next few years. According to a Reuters report, India attracted FDI inflows of $33 billion in the first half of the financial year starting in April 2023, with a total FDI of $71 billion recorded in the previous financial year.
