Many foreign firms have shown interest in providing satellite-based services in India following the Modi government's decision to open up the space sector. It now needs to appoint a truly independent regulator and frame sensible rules to encourage investments.
In yet another step towards fulfilling its promise of opening up every sector of the economy to private participation, the Narendra Modi government has allowed private players and start-ups to enter India's space sector. This historic decision first announced by Indian Finance Minister Nirmala Sitharaman in May was formally cleared by the Cabinet in June with a bland statement that belied the paradigm shifting reform. “This will unlock India's potential in the space sector,” Jitendra Singh, a minister in Modi's Council of Minister's told the media.
The Indian Space Research Organization (ISRO) is the leading, and currently only, player in the Indian space sector. It is the largest manufacturer, service provider and technology developer in the sector. It is also, effectively, the sector regulator.
The reforms envisage private and even foreign companies in the space sector to use ISRO's infrastructure and facilities, scientific and technical resources, and even data for their space programmes. Currently, private participation in India's space sector is limited to manufacturing and fabrication of satellites and rockets and the supply of some components and sub-systems.
“This is a big deal, along the pattern of deregulation that we last saw in the 1990s. Tiny as the private sector is today, and turbulent as the immediate pandemic-ridden years will be, India now has an opportunity to discover its competitive advantages in this space and increase its share of the growing global market. That is why it is important to ensure that the devil of the details does not spike the cabinet's intentions and throw the sector into a purgatory of sorts,” Nitin Pai, Co-founder and Director of The Takshashila Institution, an independent centre for research and education in public policy, wrote in a recent article.
These reforms will take private sector participation in India's space sector much deeper than at present. Now, private companies such as Larsen & Toubro, Godrej & Boyce and a few 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.
However, ISRO Chairman K. Sivan, who is also the Secretary, Department of Space, Government of India, told the Indian Express, a leading English daily, that India accounts for a mere 3 per cent of the $360-billion international space market.
Of this, a mere 2 per cent comes from the launch of rockets and satellites. The overwhelming bulk of revenues in the global space market accrue to companies and organisations that provide satellite-based services and ground-based systems controls.
So, even as ISRO and India have gained market share and earned a reputation as a low-cost and reliable partner for frugally engineered space launches, it has still lagged behind other countries in the space sector.
Consider the hard numbers: India's share of the global space market is $7 billion mostly at the lower end of the market. Obviously, there is huge scope for growth. And the larger role envisaged for the private sector, including start-ups, will facilitate innovation and help the country move up the value chain and gain a larger share of this market.
Private players, including start-ups, are waiting for the fine print of the new guidelines to come out. In particular, they are keenly watching out for what it says about IP rights. Currently, very few Indian companies, even the big ones that supply to ISRO, own the IP of the products they supply. ISRO owns all the patents to the technologies involved. The private sector mostly functions as job workers and contract manufacturers.
ISRO will have to undergo a painful cultural transition for this to change and for it to embrace the private sector as full and equal partners, said a senior retired government official who was involved with India's space sector till recently.
Sivan offered tantalising glimpses of what the policy may offer when he told ToI, another leading Indian daily: “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 do so through FDI.”
Several foreign companies have already approached the government in this regard. For example, KSAT, a leading Norway-based telecommunications provider, and UK-based OneWeb, in which Indian telecom major Bharti Airtel has a stake, want to set up ground stations in India.
“OneWeb will have the world's largest constellation (of satellites) in low-earth orbit. We will have 648 satellites covering the earth and testing will begin next year. We desire to get permission to use satellites here and we've identified areas in north, south, east and west for ground stations to start delivering services once the constellation is complete,” Bharti Airtel Chairman Sunil Bharti Mittal told ToI.
Today, with satellite-based navigation systems becoming the norm even in everyday civilian life and satellite data and imagery being used in sectors as diverse as agriculture, transport, logistics, telecommunications, broadcasting and others, there is a massive unaddressed market for space-based applications in India.
Though it has never been quantified, experts believe it will be worth at least several tens of billion dollars a year.
With domestic and foreign companies being encouraged to play a larger role in India's space sector, there is a need for a separate space sector regulator to avoid the obvious conflict of interest that arises from the current situation.
The government has approved the Indian National Space Promotion and Authorisation Centre (IN-SPACe). This body, which is expected to be operational by the end of this year or by early next year, will play the role of regulator and provide a level playing field for every company operating in the sector. It will also coordinate between ISRO and the new private and foreign companies that enter the sector and ensure the optimal utilisation of resources.
This will, however, not extinguish all scope for conflicts of interest as the body will come under the Department of Space. As Pai wrote in the same article referred to above: “While K Sivan... categorically stated that 'IN-SPACe will be a totally autonomous body, which won't be influenced by ISRO and it won't influence ISRO's work', he is also concurrently the Secretary of the Department of Space (DoS) and Chairman of the Space Commission.
“Even if IN-SPACe is independent of ISRO, to the extent that it is under the DoS, it cannot be truly autonomous, and will certainly not be perceived as such. Among the first tasks, therefore, would be the painful one of severing the roles of Chairman of ISRO and Secretary of DoS. There is no dearth of talent at the highest level and if civil service seniority levels are carefully managed, a satisfactory solution can be evolved.”
Globally, ISRO faces competition not only from established behemoths such as NASA, the European Space Agency, Russia and China but also well-funded private space companies such as Elon Musk's SpaceX and Jeff Bezos' Blue Origin.
So, it is imperative for the government to quickly follow up on this important reforms measure and frame simple rules for the private sector to enter India's space sector in a more meaningful manner, if India and ISRO are to retain their competitiveness and move up the value chain in the global commercial space market.