The sector is in an embryonic stage and there is scope to create a viable business model
The great space race of the 20th century began with the Soviet Union’s launch of Sputnik in 1957. It was a competition between the great powers of the world, a test of their ideologies, which proved to be a synonym for the entire Cold War. The capitalist United States and the socialist Soviet Union. The space race has started again, but this time, the private players are in the domain of power to take the next leap for mankind and democratize the use of space to create 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 Indian government created a new organization called IN-SPACe (Indian National Space Promotion and Authorization Centre), a “single window nodal agency” set up to promote commercialization of Indian space activities. A complement to the Indian Space Research Organization (ISRO), the agency promotes the entry of non-governmental private entities (NGPEs) into the Indian space sector. The agency will also honor the rapid on-boarding of private players in the sector by encouraging policies in a conducive regulatory environment and synergizing through pre-existing necessary facilities, the report said.
Today, the space economy is a $440 billion global sector, with India accounting for less than 2% of the sector. This is despite the fact that India is a leading space-faring country with end-to-end capabilities to build satellites, develop enhanced launch vehicles and deploy inter-planetary missions. While total early-stage investments in space technologies stood at $68 billion in FY2011, India ranked fourth with investments in about 110 firms, totaling no more than $2 billion.
obstacles
Another aspect to be shed is the widespread brain drain in India, which has increased by 85% since 2005. This can be coupled with policy constraints that hinder attracting investors for private space enterprises and founders, making it virtually non-viable to operate in India.
Currently, a report by a leading news portal says: The reason for the lack of independent private participation in the space includes the lack of a framework to provide transparency and clarity in the laws. The laws need to be divided into several sections, each to address specific parts of the value chain and in accordance with the Outer Space Treaty (or United Nations resolution, the Treaty on Principles that govern the activities of states in the exploration and use). outer space, which includes the Moon and other celestial bodies). It further states that by dividing the activities into upstream and downstream space blocks, the legislators will be able to provide a solid foundation to the products/services developed by the non-government and private sectors within the value chain.
license, liability
It says: “With the technicalities involved in the space business, the timing of licensing, issuance of authorization and continuous supervision mechanisms need to be defined in phases, as in France, where in addition to a case-by-case authorization there are four attainables.” licences, with a lack of clarity around cost”.
Another important aspect of space law is the insurance and indemnity clarity, particularly about who or what entity bears liability in case of an accident. In many Western countries with developed private space industries, there is a range of liability and financial losses 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 private entities are involved in equipment and frame manufacturing, either with outsourced specifications or leasing licenses. However, in order to create value, Indian space private companies need to generate their own intellectual property for an independent product or service (such as satellite-based broadband), with ISRO being neither their sole or largest customer nor is it their IP. provides and ensures buy-backs (which was how most of the suppliers in the Indian space ecosystem were born in the last three decades). This will help in opening the doors to global markets.
Mature space agencies such as the United States’ National Aeronautics and Space Administration (NASA), China’s China National Space Administration (CNSA), and Russia’s Roscosmos (Roscosmos State Corporation for Space Activities) with support from private players such as Boeing, SpaceX and Ask for Blue Origin goes beyond manufacturing support for complex operations, such as sending crew and supplies to the International Space Station. These companies have revolutionized the space sector by reducing cost and turnaround time with innovation and advanced technology. For such purposes, NASA and CNSA give a portion of their annual budgets to private players. As of 2018, SpaceX was part of 30 NASA missions, receiving more than $12 billion under the contract.
India currently stands on the cusp of building a space ecosystem and with ISRO being the guiding body, India can now grow into a space start-up hub for the world. The sector is in the embryonic stage where the possibilities are limitless with the scope to build a viable business model. Already more than 350 start-ups like Agnikul Cosmos, Skyroute Technologies, Dhruv Space and Pixel have established a strong foundation for in-house technologies with a practical unit of economics. However, for the growth engine to continue, investors need to see the sector as the next “new-age” boom and ISRO needs to go from being a supporter to a pro. To ensure that the sky is not the limit, investor confidence needs to be increased and for this clear laws need to be defined.
Rajesh Mehta is a leading consultant and columnist working on market penetration, innovation and public policy. Ushya Goel is a financial researcher with specific interests in international trade and capital markets.
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