Opening Up of India’s Space Sector: Opportunities, challenges

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Recently, The Union Cabinet approved the formation of the Indian National Space Promotion and Authorization Centre (IN-SPACe). The move marks the first leap in opening up the space sector to the private players after the Finance Minister declared government’s intentions to open up in her declaration of Atmanirbhar Package.

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India’s Space programme at crossroads

  • India’s space programme under the leadership of Indian Space Research Organization (ISRO) which was formed in 1969 is growing leaps and bounds.
  • With Successful Missions to the Moon and Mars, it has showcased its technological capabilities.
  • The two launch vehicles, PSLV and GSLV are acknowledged to be one of the most effective in space programmes around the world. India’s Launch Vehicles put many foreign satellites in the space.
  • The Successful testing of GSLV-MKIII, Space Capsule Recovery Experiment and other necessary technologies, ISRO is now aiming to put Indians in Space through its GaganYaan Mission.
  • The Indian Regional Navigation Satellite System (IRNSS) has opened a new dimension of South Asian cooperation.
  • There is a growing demand from agriculture, weather to defence, telecommunication industries for space-based services that ISRO has been providing.
  • The Space competition will only grow in the future with foreign private players like SPACEX proving its mettle in the space programmes.

What is the need to bring private players into space sector?

  • As we have discussed, there is a growing demand for space-based applications and services in the country and abroad.
  • ISRO as a single lead is unable to meet the expectations of the growing Demand in both speed and scale.
  • According to K. Sivan, The current ISRO chairman:
  1. Indian Space Industry accounts only 3% of the rising $360bn global space Rockets and satellite launch account only 2-3% of global volume.
  2. If India wants to meet only the local demands, it has to increase its present size by 10 times.
  • Currently, India is undertaking only 2-3 major launches a year using the workhorse PSLV. This is a meagre number if the potential, demand and developmental needs of the country are considered.
  • The global space race has been reinvigorated in recent years and India cannot lag in this. But for India to concentrate of commanding goals such as manned space mission, space exploration of critical importance, it has to sub-contract its regular (tried and tested) load to private players.
  • The private player is already engaged in space sector, even if in small scale. It wants to scale up its activities in space sector and has acquired the capacity through years of engagement with ISRO.

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What is IN-SPACe?

  • IN-SPACe will be an autonomous nodal agency under the Department of Space and is expected to start functioning within next six months.
  • It’s role will be that of facilitator and regulator for private space industry which will help as a necessary support to conduct its servies.
  • IN-SPACe is a holistic approach where it will assess the needs of the private sector including educational and research institutes and will find ways to accommodate these demands in cooperation with ISRO.
  • It will have an important role of assessing ways for optimum utilization of India’s Space resources and capabilities.
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How IN-SPACe will help private sector?

  • Currently, the private space industry in India has a peripheral/sub-contracting role in India’s space programme.
  • Large amount of manufacturing and fabrication of space components happen in private sector.
  • It means that the private sector is now only a supplier of components and does not rely engage in original research.
  • ISRO will now help private players with its technology and research and even space data.
  • A few private companies are in a process of developing their own launch vehicles. ISRO will help them with its own facilities, capability sharing, resources including land for launching satellites in ISRO’s launching stations.
  • ISRO can initially lend them technologies and assistance in launch programmes and later private players can build their own jointly-run launch facilities.
  • Existing ISRO infrastructure, both ground- and space-based, scientific and technical resources, and even data are planned to be made accessible to interested parties to enable them to carry out their space-related activities.

What are some other activities by Government that helps private sector?

  • ISRO has implemented technology transfer since 1980s including polymers, computerised systems, electronics, electro-optical systems and ground-based technology for satellite systems.
  • In one of its latest transfers, the space agency has transferred Lithium ion-cells to a handful of state and private enterprises.
  • In the last few years, ISRO has signed around 27 contracts with private sector to build satellites.
  • ISRO also has set up a space technology park in Bengaluru to provide important services to use for industry.
  • The committee headed by Dr. Pillai which submitted its report two years ago emphasized on opening space sector to private players. It suggested that private players can be brought into launch and satellite building in gradual manner.
  • The Draft Space Activities Bill, 2017 is an attempt to bring in national legislation for supporting the overall growth of the private space industry through standardization in compliance with international treaty obligations.
  • Sivan recently told that the bill is in final stages of being placed in parliament. He has also said that a new Navigation policy as well as a suitable remote sensing data policy and SATCOM (Satellite communication) Policy is also on the anvil.
  • The newly formed commercial enterprise called the NewSpace India Limited, under the Department of Space is meant to help the private sector with transfer of some technologies to the private sector, especially the small satellite launch vehicle that is being developed and even the older PSLV. It will serve as an internal marketing arm of ISRO.
  • It will complement ANTRIX which handles ISRO’s commercial deals for satellites and launch vehicles with foreign customers.

What are the advantages of private sector involvement in space sector?

  • With private sector taking the regular commercial load, ISRO will be free to develop projects of national developmental-security importance.
  • With private sector taking commercial role, ISRO will be able to launch its demand number of 18-20 important satellites per year.
  • Private payer involvement can augment technological capacities by getting cutting edge technology and latest innovations.
  • Privatization of commercial space programme will free up fiscal burden because of it and the investment can be directed to projects of public utility and socio-economic importance.
  • The private space sector is still in nascent state but it already has around 50 startups which are working in cutting edge technology along with subcontracting projects.
  • IN-SPACe will provide a necessary level playing field for private companies to use Indian Space Infrastructre.
  • Greater role to private players will build a strong private sector in space programmes. It will create huge employment and high skilled labour market in private industry.
  • Launch programmes require three kinds of industries-heavy and hard metals, alloy and composite technology, and electrical and electronic industries.
  • A synergic consortium led by two-three large companies like L&T and Godrej supported by large number of small-scale companies can create a niche ecosystem mainly catering to space sector.
  • This is a great potential as it will not only create a self-reliant space industry in country but will also help in innovation and IPR generation through original research and spin-offs.
  • Private space sector, especially the NewSpace industry and star-ups have an advantage in terms of cost-effective operations which in itself a big reason for inclusion of private sector
  • Not only private sector, the public sector companies like Hindustan Aeronautics which have experience in aeronautics can lead such consortium and help build and grow small scale industry.
  • A sound space sector with private presence leads to greater revenue generation both internally and through export adding to already strong forex reserves.

What are the issues with the private participation in space industry?

  • Even though the IN-SPACe has created positive hopes, industry experts are not sufficiently enthusiastic about it. They fear about the effective implementation
  • They feel that unless there is a conducive structure for private sector to engage, the announcement is mere a lip service.
  • The private sector is particularly concerned about the intellectual property rights sharing by ISRO. Till now, ISRO has looked at private sector as supply chain without substantive technology transfer, according to experts.
  • There is also demand for an independent regulator for private engagement which will ensure a level playing field to operate.
  • The space sector is a very risky business with high negative returns and failures. The private sector demands a clarification on research and development risk funding which is critical to develop new technologies.
  • There is a need for a comprehensive legislation that clarifies on the amount of space of operation the government is ready to provide. this is largely due to the complexities involving space science and technology, which is a strategic sector, any ensuing legislation will need to be clear and enforceable in a manner that encourages private initiative, investment, management and technological input.

What is the way forward?

  • As seen in the above discussion, opening up the space sector has immense potential but laced with difficulties.
  • The current pandemic situation has hit the space sector too. Care needs to be taken that this will not hamper the implementation of privatization.
  • Space start-ups are in nascent stage. They can be more innovation oriented than bigger companies who might be mere interested in profits through sub-contracting works.
  • Hence start-up ecosystem must be nurtured and supported with money, resources and policy.
  • The draft legislation must be steadfastly brought in the parliament and passed to avoid any post-legislation balancing.
  • There needs an ecosystem of think tanks, research institutions and skilling institutions to feed the growth of private space industry.
  • The Skill India Mission must be utilized to bring in required skill-sets in young technological section.
  • The industry reservations in IP issues must be resolved through appropriate reforms where local industry can invest in building their own IP and/or products that can match global standards.
  • This in turn means that policymakers will need to view industry as more than sweatshops and look at what steps can be taken for IP/product development by private industry.  This is the only way to integrate India’s private sector into the global supply chain

Conclusion

The Space sector is one of the glorious success stories of independent India. It has destroyed prejudices and built an image of technological hotshot for India on global platform. Now is the time to build on this achievement and promote private sector participation in innovation-filled and entrepreneurial space sector. We should take some lessons from faulty economic liberalization that created mismatch in the pace of private growth and policy support with later following the earlier.

Practice Question for Mains

Critically analyze the necessity and issues in privatizing the space sector. What is the government doing to open space sector to private players? (250 words)

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