Startups spurring the new wave of space revolution in India

Startups spurring the new wave of space revolution in India

ET August 05, 2022

Privatisation of the space sector in the USA started at the end of 1984 when Ronald Reagen signed the Commercial Space Launch Act, thereafter two policies were announced in the next decade which set the stage for privatisation. However, the entry of serious players took place in the 2000s with the entry of Starlink, Blue Origin, Virgin Galactic and many others. This period also saw the growth of many startups in the USA and the New Space phenomena came into being. As of today, as per the Space-tech report 2021, USA has the largest number of space tech companies in the world. There are a total of 5500 Space-tech companies. The next country, the UK, has about 3000 space-tech companies. Interestingly, India stands in the fifth position with 365 companies, slightly ahead of China.

India’s space journey started with a humble beginning of firing of weather-sounding rockets in the early sixties, and this, of course, grew to launch vehicles and numerous satellites including National forays to Moon and Mars. The entire space journey in India has been ISRO-led, however, the private sector has been a strong partner nurtured to be a supplier of components and sub-assemblies. This is now seeing a paradigm change with the Hon’ble Prime Minister’s historical announcement in June 2020 to open space to the private sector.

Interestingly, the first startup in India came earlier in 2012 by a group of young engineers and students motivated by ISRO scientists visiting colleges and universities. It was also an ISROs initiative to promote student satellites that resulted in this early start. The first few years saw the growth in single numbers, however, the Government announcement in 2020 resulted in a manifold increase. According to the Economic Survey of India, the number of startups coming up, increased from 1 in 2012 to 47 in 2021, giving us a total of more than 100 active space startups. 2021 was the year when the space industry saw a rapid increase in startups coming up, from 21 in 2020 to 47 in 2021.

Though the Indian Space Policy 2022 is still in the process of being finalised, the enthusiasm and drive of the Indian space entrepreneurs have continued unabated. It also goes to the credit of the Department of Space and the newly formed IN-SPACe as they have examined approximately 40 different proposals and have even given a go-ahead wherever possible. Even with a lack of regulatory clarity and many other challenges such as financial challenges and non-availability of testing and launching facilities, the startups have strived for achieving their cherished goals.

Presently, there are more than ten Startups who are ready to launch their Launch Vehicles /Satellites/ products by the end of this year and early next year. There is Agnikul and Skyroot, who are testing their rockets for the launch of small payloads, Dhruva and Pixxel who are ready to launch their satellites. Another startup, Bellatrix is in an advanced stage of producing an electric thruster while Digantara would be mapping the space debris for the world. Astrome from Bangalore is working on millimetre-wave wireless communication technology to build innovative products for terrestrial and satellite communication networks. While Elena Geo Systems and Tathya earth are working on downstream products, Tathya earth is also working on building tools to monitor Economic Activities on a near real-time basis and Elena Geo Systems is providing Navigation solutions with NavIC.

The Government’s intent of being an enabler to spur innovation and growth in the space ecosystem has been wholeheartedly and aggressively pushed by our Prime Minister and is being followed with focus and drive by ISRO, IN-SPACe and all others. A whole of Government approach with a single-minded desire that this must be a success, should be aspired for. The space sector which is fraught with risks, has a long period of gestation and delayed Return on Investments, will require strong support from Government and major industrial players. Manufacturing in the space industry is a complex and challenging activity. The capital involved here is very high, due to the technology and precision involved. Even though many startups have received funding in the last few years, there is still a lack of capital to get the Indian space sector into the global space economy.

There are a few initial and crucial challenges that this ecosystem has to overcome in order to make India a global hub for space-related activities.

Financial support

For financial support apart from Government grants, loans and bank guarantees, there would be a need for tax incentives, import duty exemptions and schemes such as PLIs which will need to be finalised. FDI which is presently restricted to Satellite manufacture by Government approval route will need to be opened to ‘all domains of space’ with at least 74 % by automatic route, as has been done in the Defence sector.

Creation of assured markets and demands

The creation of assured markets and demands is another challenging area. This ultimately has to happen by the momentum of market forces, however, Government and various ministries are major users of Space, and some assured demands from Government will greatly help. In this regard, the recent proactive initiative by the Ministry of Defence to interact with private industry and Startups and plan for setting Challenges under IDEX and Make 1 and 2 is a very positive step.

Lack of companies in Downstream sector

One weakness seen in our overall startup ecosystem is that there are more companies in the upstream and midstream domain and very few in the downstream sector i.e. applications. The major economic opportunity globally is in the applications and hence we will need to create conditions for this startup segment to grow. With our well-established IT sector, it is expected that this should happen.

Space is a complex domain where many components and subcomponents must be integrated together to give a completed solution at the user end. As one single startup would be unable to do the same. This would require a collaborative and cooperative approach amongst startups and with established industry players. This could be assisted by ISpA where all its members join in a common platform.

The Startup environment in space is positively growing with the potential of the first set of startups becoming unicorns in near future. According to Inc42 analysis, the Indian commercial space tech market offers a huge opportunity of over $77 Bn by 2030. This would automatically help the further growth of new startups. A firm and positive resolve of the Government, the mentorship of ISRO & IN-SPACe and the mutual collaboration of new and old industry players with the platform provided by ISpA will surely lead to huge growth in the Indian space economy led by our Startups.

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