India is poised to encourage foreign direct investment (FDI) in the space sector, with or without joint ventures (JVs) with Indian companies, and is ready to rope in overseas companies to set up facilities in the country to make satellites and launch vehicles.
Among a host of measures announced by Indian finance minister Nirmala Sitharaman this May were an added injection of hope into ensuring that private players could enter into and do business in the space sector. On the face of it, there is reportedly ample room for private entities and start-ups to enter this area which is brimming with promise and should offer a handsome ROI. Part of the investment blueprint would also allow them to use the facilities of the Indian Space Research Organisation (ISRO) for launches as well.
The fact that the Indian government intends to share the facilities of ISRO with the private sector was part of the Narendra Modi government's call for new and bold reforms in an effort to promote its 'Self-Reliant India' mission, and is the fourth segment of the $266 billion Aatma Nirbhar Bharat Abhiyan (Self-Reliant India) economic stimulus package. The decision also opens up India's burgeoning space sector to potentially lucrative investments from entrepreneurs the world over.
On 15 February 2017, ISRO successfully launched a record 104 satellites in a single flight, onboard its Polar Satellite Launch Vehicle (PSLV-C37) from Satish Dhawan Space Centre in Sriharikota.
India's very first mission to the moon, Chandrayaan-I, confirmed the presence of water on the moon.
At $74 million, ISRO's Mars orbiter was launched at a fraction of the $671 million spent by NASA on similar missions - and even cheaper than the budget of Hollywood space blockbuster “Gravity” ($100 million).
Currently, private companies such as Larsen & Toubro, Godrej & Boyce among others serve as contractors to ISRO, supplying it with components, services and some critical assemblies. And ISRO focuses on remote sensing, meteorology, communications, television and broadband services, space exploration, navigation and defence and security-related activities.
But in a significant development, India is reportedly considering encouraging foreign direct investment (FDI) in the space sector, with or without joint ventures (JVs) with Indian companies, and ready to rope in overseas companies to set up facilities in the country to make satellites and launch vehicles.
K Sivan, Secretary, Department of Space (DoS) said: “We are going on full steam now. Foreign firms can set up facilities to make satellites and launch vehicles here, set up ground stations and use our spaceports as long as they invest here through FDI."
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According to Sivan, decisions would be taken on a case-by-case basis because of the sensitive nature of the space sector. Plus, national security and interest will remain the top priority, and companies will be required to give undertakings on following all guidelines.
Focusing on the way forward in such a scenario Sivan stated that Indian firms could enter into alliances with overseas entities on an understanding that Indian firms could have 60 per cent investment and foreign firms invest 40 per cent through FDI. The clarity, however, would need to be worked out.
With the global attention that is currently being centred on India and its economy the spotlight, quite naturally, is focused on the Indian space sector as well. ISRO and India have earned the enviable reputation of being low-cost service providers and partners for space launches that operate on a budget and attention put on innovation and helping the country gain a larger share of this market.
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Emphasising that several entities have shown interest, Sivan declared that the DoS would be able to clarify many things once IN-SPACE-Indian National Space Promotion and Authorisation Centre-is fully functional and the other policies in the offing are ready to be unveiled.
At present, IN-SPACe is already assessing several applications, including one each from London-headquartered OneWeb. Telecom czar Sunil Mittal's Bharti Enterprises owns a stake in the financially troubled satellite broadband operator, and Norway-based KSAT, a global telecommunications service provider.
What is needed at the moment is a set of guidelines that would tempt private players and start-ups who are watching out to grab IP rights. Very few Indian companies, who operate as contractors and job workers, currently own the IP of products they supply to ISRO who own all the patents to the technologies involved.
According to Sivan, Norwegian company KSAT wants to establish ground stations in India. Airtel had also sought the department's help in setting up ground stations. In the overall scheme of things such arrangements will be crucial towards furthering the profile of the space sector. ISRO is the only player in the Indian space industry. It is also the largest manufacturer, service provider and technology developer in the sector. It is also, effectively, the sector regulator.
With the private sector being encouraged to play a larger role from here on, there is a need for a separate space sector regulator in India to avoid the obvious conflict of interest that arises from the current situation.
Globally, ISRO stacks up against established competitors like NASA, the European Space Agency, Russia and China but also well-funded private space companies such as Elon Musk's SpaceX, who incidentally has been giving off sound-bytes of entering into the Indian market by next year, and Jeff Bezos' Blue Origin.
In such a competitive scenario, and if ISRO has to retain its competitive edge and ensure that its profile and equity is enhanced, it is crucial for the government to allow the private sector to enter into the space playgrounds.