Opinion: How India's Space Sector Reforms Will Add Wings To Growth

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Reforms in complex and high-stakes sectors like space are often characterised by their technical intricacies and the significant investments they require, both in terms of time and resources. Such reforms are not immediately visible or tangible and may not make headlines in the same way that more immediate, consumer-facing changes do. This lack of immediate visibility often leads to these reforms going unnoticed in the short term.

However, the true value of these reforms unfolds over the long term. In the space sector, for example, policy changes that allow for greater foreign direct investment, or ones that streamline licensing and regulatory processes, can significantly alter the landscape for domestic and international companies looking to invest in space technologies. These changes can lead to increased collaboration, transfer of knowledge and technology, and the infusion of capital, all of which are essential for the sector's growth.

A Push For Innovation

Moreover, these reforms often act as a catalyst for innovation. By opening up the sector to international partners, domestic companies can leverage advanced technologies and best practices from around the world. This can lead to advancements in satellite technology, launch capabilities, and other space-related innovations that can have wide-ranging applications.

The recent amendment in the Foreign Direct Investment (FDI) policy by the Union Cabinet are set to revolutionise the space sector in India. The policy now allows for up to 100% FDI in designated sub-sectors, with specific thresholds delineated for different activities within the space domain. For instance, up to 74% FDI is permitted under the automatic route for activities like satellite manufacturing and operation, while the same in launch vehicles and the creation of spaceports is capped at 49%. This strategic segmentation aims to streamline foreign investment flows into critical areas of the space sector, fostering an environment conducive to technological innovation and capacity building.

Atmanirbhar Dream To Become A Reality

The expected influx of foreign capital and expertise is set to enhance the quality and scope of India's space endeavours. The policy's emphasis on increasing private sector participation aligns with the broader national goals of Atmanirbhar Bharat and Make in India, positioning India as a pivotal player in the global space economy.

This is akin to what COTS, that is, the Commercial Orbital Transportation Services programme, ended up achieving for NASA. COTS, initiated by NASA in the mid-2000s, despite initial scepticism, fundamentally transformed space missions by fostering private-sector cargo transportation capabilities to the International Space Station. This underrated reform not only proved the viability of commercial cargo services, reducing the cost of space access, but also catalysed the growth of the commercial space industry, leading to increased innovation and economic growth within the sector.

In the last few years, the Union government has slowly opened up the space sector and brought in a flurry of reforms. The government came up with the Indian Space Policy in April 2023. By transitioning the Indian Space Research Organisation's (ISRO) focus from manufacturing operational space systems to the research and development of advanced space technologies, the policy aims to foster innovation and maintain India's competitive edge in the global space arena. This pivotal move allows non-government entities (NGEs) to actively participate in offering a range of space-based services, including communication services via geostationary orbit (GSO) and non-geostationary satellite orbit (NGSO) systems. The policy's inclusive stance extends to permitting NGEs to establish and operate ground facilities, engage in end-to-end space sector activities, and undertake ambitious projects such as the commercial recovery of asteroid resources.

Towards Developing A Space Ecosystem

The policy's clear guidelines on space communication, remote sensing, and other applications provide much-needed clarity for both public and private sectors, encouraging the development of a robust, innovative, and globally competitive space ecosystem in India.

It has also delineated specific roles for ISRO, the Indian National Space Promotion and Authorisation Centre (IN-SPACe), and NewSpace India Limited (NSIL). The policy ensures a coherent and efficient framework for the promotion, authorisation, and commercialisation of space activities.

Another reform has been the establishment of IN-SPACe in June 2020. It has significantly advanced the participation of the private sector in India's space industry. Acting as a facilitator and regulator, IN-SPACe has effectively bridged the gap between the ISRO and private enterprises, enabling them to engage in a range of space activities.

This, in turn, has allowed private players to undertake routine and commercial activities, freeing up ISRO to concentrate on advanced projects like interplanetary exploration and human spaceflight programmes. The policy reforms have also facilitated educational and research institutions' access to space data and resources, promoting innovation and skill development in the field.

Nurturing The Growth Of Indian Industries

Similarly, NewSpace India Limited (NSIL), which was established in 2019, has been pivotal in transforming India's space sector by providing space-related products and services that originate from the Indian Space Programme to a global audience, thereby nurturing the growth of Indian industries in engaging with high-end space activities. The NSIL's strategic vision is centred around empowering Indian industries to expand their high-technology manufacturing base for the space programme via technology transfer mechanisms.

This is in addition to addressing the needs of the emerging global commercial small satellite launch service market, delivering satellite services for various domestic and international applications, and facilitating the use of space technology spin-offs to enhance human life through industrial partnerships. The organisation's mandate is broad, covering the ownership and operation of Earth Observation and Communication satellites, manufacturing and launching satellites as per demand, providing launch services for customer-owned satellites, and developing launch vehicles in collaboration with Indian industries.

A Demand-Driven Model

In particular, NSIL focuses on significant areas such as the development of the Small Satellite Launch Vehicle (SSLV) to meet the demands of the global small satellite launch service market. NSIL serves as the central agency for the production of Polar Satellite Launch Vehicle (PSLV) via an industry consortium aimed at the assembly and integration of the launch vehicle to streamline and enhance launch services. Additionally, NSIL's responsibilities extend to satellite construction for Earth Observation and Communication, providing in-orbit delivery services, establishing associated ground segments, and transferring essential technologies and spin-offs to Indian industries.

A Beginning Filled With Promises

Further, NSIL's shift to a demand-driven mode signifies a pivotal change in India's space sector, focusing on closely aligning its services and products with the specific needs of the market and its customers, rather than adhering to a traditional supply-driven approach. This customer-centric strategy enables NSIL to offer tailor-made solutions.

Space reforms over the last few years have now started showing results. These reforms have led to an exponential increase in the number of space startups - from a single entity in 2014 to an impressive 189 by 2023. The surge has led to substantial investment flowing into these companies, totalling $124.7 million in 2023. The policy has emboldened NGEs to undertake ambitious space projects, including the launch of their satellites and sub-orbital vehicles. This will further enhance applications in critical areas such as agriculture, disaster management, and environmental monitoring.

This is just a start for the Indian Space Industry. This dawn is a story still unfolding, with the early chapters filled with promises. It is poised for a trajectory aimed at expanding our understanding of the universe, bringing advanced technologies to our daily lives, and igniting economic engines.

[Bibek Debroy (on X @bibekdebroy) is Chairman, EAC-PM & Aditya Sinha (on X @adityasinha004) is OSD, Research, EAC-PM.]

Disclaimer: These are the personal opinions of the author.