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Context

After the launch of Sputnik in 1957, space race is on again, but this time, private players are on the power field. This has huge implications for original equipment manufacturers (OEMs) in the space sector in India and is a promising venture for global investors.

Insignificant share of India in space economy

• 2% India’s share: The space economy is a $440 billion global sector, with India having less than 2% share in the sector.
• 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.

Reasons for India’s insignificant private participation

• Absence of a framework: The reason for the lack of independent private participation in space includes the absence of a framework to provide transparency and clarity in laws.
• Brain drain: Another aspect to throw light on is the extensive brain drain in India, which has increased by 85% since 2005.
• Policy bottlenecks: Brain drain 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.

Suggestions

• 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.
• Dividing into upstream and downstream: 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.
• Timeline on licensing: With the technicalities involved in the space business, timelines on licensing, issuance of authorisation and continuous supervision mechanism need to be defined into phases.
• Insurance and indemnification clarity: 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.
• Need to generate own IP: 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 with ISRO neither being their sole or largest customer nor providing them IP and ensuring buy-backs.

Possibilities for India and the government’s effort

• 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.
• 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.
• Last year 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.

Consider the question “Examine the factors responsible for hindering the participation of the private sector in India’s space industry? Suggest the ways to increase the participation of private sector.”

Conclusion

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.

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Back2Basics: The Outer Space Treaty

• The Outer Space Treaty was considered by the Legal Subcommittee in 1966 and agreement was reached in the General Assembly in the same year ( resolution 2222 (XXI)).
• The Treaty was largely based on the Declaration of Legal Principles Governing the Activities of States in the Exploration and Use of Outer Space, which had been adopted by the General Assembly in its resolution 1962 (XVIII) in 1963, but added a few new provisions.
• The Treaty was opened for signature by the three depository Governments (the Russian Federation, the United Kingdom and the United States of America) in January 1967, and it entered into force in October 1967.
• The Outer Space Treaty provides the basic framework on international space law, including the following principles:
• The exploration and use of outer space shall be carried out for the benefit and in the interests of all countries and shall be the province of all mankind;
• Outer space shall be free for exploration and use by all States;
• Outer space is not subject to national appropriation by claim of sovereignty, by means of use or occupation, or by any other means;
• States shall not place nuclear weapons or other weapons of mass destruction in orbit or on celestial bodies or station them in outer space in any other manner;
• The Moon and other celestial bodies shall be used exclusively for peaceful purposes;
• Astronauts shall be regarded as the envoys of mankind;
• States shall be responsible for national space activities whether carried out by governmental or non-governmental entities;
• States shall be liable for damage caused by their space objects; and
• States shall avoid harmful contamination of space and celestial bodies.