On A Mission To Power The Economy

On A Mission To Power The Economy

Business World June 13, 2022

India has emerged as the sixth largest and one of the fastest-growing major economies in the world. As per the current projections from the Ministry of Commerce & Industry, India can grow to USD 5 trillion by 2027, and space, after the government opened the domain to private industry, is emerging as a key contributor.

Where is Indian Space Heading?

Since its humble beginning in the 1960s, space programmes in India have accomplished major milestones and have been comparable with the most advanced in the world. Spearheaded by the prestigious Indian Space Research Organisation (ISRO), the country’s space mission has traversed a long journey by undertaking competitive space programmes for India as well as its partner countries. With a major focus on space missions and the manufacturing of satellite and launch vehicles, ISRO’s yearly budget has already surpassed Rs 10,000 crore ($1.45 billion), up from Rs 6,000 crore five years ago.

However, there’s an increasing demand for space-based services in India and also globally thanks to the changing market dynamics and the technology revolution sweeping the communications and space industries. The global space economy is pegged at $371 billion. However, India’s contribution stands at approximately just 2.6 per cent. With India’s stature as a space-faring nation combined with a large user populace, there is an opportunity for India. The global space economy is expected to rise to $1 trillion in the coming decades and we need to have our share. The Indian space sector needs to grow at approximately 48 per cent CAGR over the next five years to reach its target of $50 billion. Hence, the focus now shifts to creating a robust industry ecosystem by identifying the right opportunities and facilitating a favourable business environment. 

Disruptive technology, AI, Blockchain have Revolutionised Space

Reusable rockets and miniaturisation of assemblies and sensors have resulted in nanosats and mega-constellations of small satellites in low earth orbit (LEO) gaining prominence in recent years. Satellites capable of performing dedicated tasks such as in-space repair or technology upgrades for in-orbit satellites are the new areas. The manufacturing of small satellite launch vehicles will contribute to building a strong space ecosystem, and through this, the players, including the SMEs, can garner a fair share of the growing launch market. As the horizon expands, the industry opens diverse possibilities for the players to enter into different segments of the industry.

Private Participation to Lead Space to a New Level

Over the past few decades, the Indian space industry witnessed the emergence of several SMEs adept at supplying components for satellite and launching vehicle manufacturing. They were primarily supplying to ISRO. However, a major industry milestone was achieved in late 2017 when ISRO opened its facilities for private players for the assembly, integration and testing (AIT) of 35 satellites. The agency has also formed public-private partnership (PPP) policies to further augment the space programmes by engaging a small consortium of private players.

The participation of private players was limited to component supplies, and their active role in space programmes, from production to launch, was far-fetched. The industry now believes that active participation of the private players is crucial to address the rising demand from the sector, not just for the country’s space programmes but also for commercial satellite launches for communications and other in-space services requirements.     

Make In India, Supported by Right Policies

India has an edge over its global competitors due to the growing ecosystem of domestic manufacturers and the large human resource with strong IT skills, which has the potential to push the industry’s growth trajectory in an upward direction. With the government’s Atmanirbhar Bharat initiative, the focus has again shifted to achieving sustainable development through local manufacturing. Thus, for the space sector in India, the time is appropriate for the formulation of industry-friendly policies wherein the stakeholders, including the private players, get their voice heard and thus can draw the fullest of their capacity for the benefit of the industry.

The recent launch of the Indian Space Association by PM Narendra Modi was to open the industry for private players. The industry body will act as an independent and single-window agency for enabling the opening up of the space sector to startups and the private sector. It also aims to undertake policy advocacy and engage with all stakeholders in the Indian space sector, including the government and its agencies. It will also provide industry players including startups a platform for mutual collaboration.

Investor-friendly policies are required to create further enthusiasm and build confidence at the investor level. Government should also explore the possibility of PPP across other unexplored segments.

The Big Challenges in Space

Companies entering India’s space industry will face enormous challenges, especially in terms of capital expenditure and regulatory bottlenecks. The lack of an established regulatory framework for technology commercialisation and finance will result in investment challenges.  With the poor economy of scale in the initial stages, Indian players are most likely to face challenges while competing with established players in the global market. The sector needs financial incentives such as production linked incentives and tax holidays in the initial years.

The Indian space sector has the potential to emerge as a leading contributor to the

USD 5 trillion economy. Early promulgation of the Space Activity Bill along with the new Space Communication and Remote Sensing policies with light touch regulations will help in the growth of the sector.

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