Government’s Streamlined Policy and Regulations Important to Enable Private Sector Investment in Space

By Sri Krishna


New Delhi: The government is keen on boosting private sector investment in space with the Indian National Space Authorisation Centre (IN-SPACEe) setting a target to increase private sector investment in space of  8% by 2033 and 15% by 2047, the 100th year of Independence.

However,  the private sector appears hesitant as it wants streamlining of policy and regulation and hopes to see the Space Activities Bill, which was introduced in Parliament in 2017 and awaits its approval. It is imperative to get this legislation through as it encourages the participation of private sector players in space activities.

“It will give a very clear role and legal teeth to the various entities,” said Sreeram Ananthasayanam, a partner with Deloitte.

Ironically, the hesitancy by private sector to participate in the nation’s space programme comes despite the success of the Chandrayaan-3 mission and the introduction of a space policy in April 2023. The global space economy is currently around $447 billion, according to estimates by McKinsey. India’s share of the pie is about $8 billion, a measly two per cent. The Chandrayaan-3 mission successfully landed on the south pole of the moon on August 23, 2023. ISRO aims to set up the first Indian Space Station by 2035.

“We are aiming for the first module of the Indian Space Station by 2028, and then we would progressively start building it so that the Indian Space Station will be in orbit by 2035,” said Victor Joseph, associate scientific secretary at ISRO.

Speaking at a panel discussion on ‘From the Moon to the Sun: The Dawn of the India NewSpace Ecosystem’ at the Bengaluru Tech Summit, he said  that besides landing an Indian on the moon by 2040, ISRO has charted out its road map of space programmes till 2047.

According to Ananthasayanam, the new space policy has democratised the space sector, unlike earlier when the sector was highly regulated, decisions were centralised and very little commercialisation happened. He noted that significant private participation and cross-border collaboration have been happening in the sector, the role of non-government entities has been formalised, and the policy has laid out who is going to do what.

With the recent measures taken to expand the role of private players in the space sector, Indian Space Association (ISpA),  a premier industry association of space and satellite companies aims to bring public and private entities together so that they can work in tandem for the expansion of the Indian space programme.

There is need for encouraging the private sector in the space programme of the country as it is lagging in harnessing the power of private innovation in the space domain.  This not only limits the exploitation of space for economic development, but has serious national security implications.  Although ISRO encourages private sector participation in the national space programme, its model is still very 20th century — in terms of governmental domination.

The space industry has indeed undergone  a paradigm shift, moving from Space 3.0 to Space 4.0. While  Space 3.0 was characterised by large government investments and public-public collaborations,  Space 4.0 is a more democratized and accessible field with more public-private and private-private collaborations.

The entry of private sector has begun to drive down the cost-per-launch through innovations such as reusable rockets.  The biggest advantage is the production and launching of satellites, which is a huge benefit for communications.  If a private company owns and launches its own satellite then they can use this data for mapping, weather forecast, industrial surveys, water and energy mapping, road and building construction, agriculture.

A major challenge in setting up a space business in India is funding.  The Space industry is capital intensive and upstream activities come with a long gestation period. The size of the space economy in India is small.

On the other hand, United States, Europe, Russia have space industries with big players like Boeing, SpaceX, Air Bus, Virgin Galactic. There is no such ecosystem in India.

Another area of concern for the private players is lack of Regulation. India is a party to the Outer Space Treaty, where one of the fundamental requirements laid upon states is the supervision of space activities within its borders, and the country did not have any formally legislated laws.  This is a potential roadblock for commercialisation.

The private sector already supplies majority of the sub-systems in satellite manufacturing. This can be further scaled up into other activities with proper regulation and partnership of the ISRO and private sector.

“It will give a very clear role and legal teeth to the various entities,” said Ananthasayanam. He also made a case for further tax exemptions, tax holidays, incentives and grants for the private players in the space sector and production-linked incentives — not just for space components but also for space-grade components that could be used in non-space sectors.

“We did an industry consultation at Deloitte with 20 odd start-ups last week … One of the key things that start-ups were clear and unanimous in asking for was some kind of assembly integration testing facilities, which probably the government would subsidise because this is capital intensive,” he said, demanding a mechanism to take care of the huge working capital, and grants similar to what iDEX (Innovation for Defence Excellence) offers defence companies.

One of the major demands from the private sector is a long-term commitment from the government to ensure demand for space-related products and services.

Noting that space is a highly capital-intensive domain and most products are made to order and have a long lifecycle, Ananthasayanam said, “Unless and until there’s a long-term established demand, it is really difficult for the private sector to start investing in it. Perhaps the government could announce that they are going to be the front-runner in terms of consuming space imagery for decision-making. Or perhaps they could mandate that as a policy.”

“Most importantly there are legacy private sector space companies who have been tier-1 suppliers to ISRO. Is there a way by which they can act as mentors or coaches to the startup ecosystem and start helping them to grow?” Ananthasayanam wondered. “If we can focus on such aspects, our ambitions would become a reality much before 2047,” he added.