India's Private sector in space

Issue related to Science and Technology, Economy

Source: The Hindu

Context: 

For the first time in the space race, private players are on the power field to take the next leap for mankind and democratize space usage to build commercial value. This has huge implications for original equipment manufacturers (OEMs) in the space sector in India and is a promising venture for global investors.

India, a very marginal player

In 2021, the Government of India created a new organisation known as IN-SPACe (Indian National Space Promotion and Authorisation Centre) which is a “single window nodal agency” established to boost the commercialization of Indian space activities.

A supplement to the Indian Space Research Organisation (ISRO), the agency promotes the entry of the Non-Government Private Entities (NGPEs) in the Indian space sector. The agency will also felicitate a swift onboarding of private players in the sector through encouraging policies in a friendly regulatory environment and by creating synergies through already existing necessary facilities, the report says.

The Space Economy size: Today, the space economy is a $440 billion global sector, with India having less than 2% share in the sector. This is despite the fact that India is a leading space-faring country with end-to-end capabilities to make satellites, develop augmented launch vehicles and deploy inter-planetary missions.

Investment scale: While total early-stage investments in space technologies in FY21 were $68 billion, India was in fourth place with investments in about 110 firms, totaling not more than $2 billion.

The hurdles:

Extensive brain drain in India: which has increased by 85% since 2005. This can be linked to the bottlenecks in policies that create hindrances for private space ventures and founders to attract investors, making it virtually non-feasible to operate in India.

Absence of a framework to provide transparency and clarity in-laws:  The laws need to be broken down into multiple sections, each to address specific parts of the value chain and in accordance with the Outer Space Treaty (or the United Nations resolution, the Treaty on Principles Governing the Activities of States in the Exploration and Use of Outer Space, including the Moon and Other Celestial Bodies). Dividing activities further into upstream and downstream space blocks will allow legislators to provide a solid foundation to products/services developed by the non-governmental and private sectors within the value chain.

Licenses, liability: with the technicalities involved in the space business, timelines on licensing, issuance of authorization, and continuous supervision mechanism needs to be defined into phases, like in France, where there are four obtainable licenses in addition to case-by-case authorization, with lack of clarity surrounding costs.

Insurance and indemnification clarity: Clarity particularly about who or which entity undertakes the liability in case of a mishap is required. In several western countries with an evolved private space industry, there is a cap on liability and the financial damages that need to be paid. In fact, space operators are required to hold insurance of up to AUD$100 million under Australian space law.

Intellectual Property: Currently, many of the private entities are involved only in equipment and frame manufacturing, with either outsourced specifications or leased licenses (without any innovation of their own). However, to create value, Indian space private companies need to generate their intellectual property for an independent product or service (e.g. satellite-based broadband) with ISRO neither being their sole or largest customer nor providing them IP and ensuring buy-backs. 

The Global Practice:

Mature space agencies such as the National Aeronautics and Space Administration (NASA) of the United States, China’s China National Space Administration (CNSA), and Russia’s Roscosmos (Roscosmos State Corporation for Space Activities) seek support from private players such as Boeing, SpaceX and Blue Origin for complex operations beyond manufacturing support, such as sending crew and supplies to the International Space Station.

These companies have revolutionized the space sector by reducing costs and turnaround time with innovation and advanced technology. For such purposes, NASA and the CNSA award a part of their annual budget to private players.

For example: Until 2018, SpaceX was a part of 30 missions of NASA, getting over $12 billion under contract.

Way forward:

Status of India today: India currently stands on the cusp of building a space ecosystem and with ISRO being the guiding body, India can now evolve as a space start-up hub for the world. The sector is in the embryonic stage where the possibilities are limitless with a scope to build a feasible business model.

Indian Start-ups: Already 350 plus start-ups such as AgniKul Cosmos, Skyroot Technologies, Dhruva Space, and Pixel have established firm grounds for home-grown technologies with a practical unit of economics.

However, we need investments:  to continue the growth engine, investors need to look up to the sector as the next “new-age” boom and ISRO needs to turn into an enabler from being a supporter.

Better regulation to boost investor confidence: To ensure that the sky is not the limit, investor confidence needs to be pumped up and for the same, clear laws need to be defined.