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A launch window for India as a space start-up hub

The great space race of the 20th century was kicked off by the Soviet Union’s launch of Sputnik in 1957. It was a competition between the world’s great powers, a test of their ideologies, which proved to be a synecdoche of the entire Cold War between the capitalist United States and the socialist Soviet Union. The space race is on again, but this time, private players are on the power field to take the next leap for mankind and democratise 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

Last year, according to a report, 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 commercialisation 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 on-boarding 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.

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

The hurdles

Another aspect to throw light on is the extensive brain drain in India, which has increased by 85% since 2005. This can be linked to the bottlenecks in policies which create hindrances for private space ventures and founders to attract investors, making it virtually non-feasible to operate in India.

Currently, a report on a leading news portal says: the reason for the lack of independent private participation in space includes the 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, it adds.

Licences, liability

It says: “with the technicalities involved in the space business, timelines on licensing, issuance of authorisation and continuous supervision mechanism need to be defined into phases, like in France, where there are four obtainable licences in addition to case-by-case authorisation, with lack of clarity surrounding costs”.

Another crucial aspect of space law is insurance and indemnification clarity, particularly about who or which entity undertakes the liability in case of a mishap. 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.

As a part of the system

Currently, many of the private entities are involved in equipment and frame manufacturing, with either outsourced specifications or leased licences. 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 (which was how most suppliers in the Indian space ecosystem were born over the last three decades). This will help open the door to global markets.

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

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

Rajesh Mehta is a leading consultant and columnist working on market entry, innovation and public policy. Uddeshya Goel is a financial researcher with specific interests in international business and capital markets


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Printable version | Jan 20, 2022 8:08:34 AM | https://www.thehindu.com/opinion/op-ed/a-launch-window-for-india-as-a-space-start-up-hub/article37760312.ece

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