Explained | Why is the Indian space industry looking for private sector investment?

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The story so far: Chief science adviser Ajay Kumar Sood said earlier this month that the government would soon come up with a new space policy that could initiate the rise of India’s “SpaceX-like businesses”. Mr Sood said the proposed decision would increase private sector participation in the industry. Consultations have already taken place and the final version of the policy will soon be forwarded to the Empowered Technology group for further review. According to Mr. Sood, India has not exploited its full potential in this sector. “In 2022, the space sector is witnessing what the information technology sector experienced in the 1990s. We will have our own SpaceX (SpaceX is Elon Musk’s private space transport company) in the next two years “, did he declare.

Why is development in the space sector important?

Improved space technology would be beneficial to enhance connectivity and combat climate-related implications in safer and more efficient ways.

Satellites provide more accurate weather forecast information and assess (and record) long-term trends in a region’s climate and habitability. For example, by monitoring the long-term impact of climate change at regional, territorial and national scales, governments could design more pragmatic and combative action plans for farmers and dependent industries. Moreover, they can also serve as real-time monitoring and early warning solutions against natural disasters such as earthquakes, tsunamis, floods, forest fires, mining, etc. Real-time tracking can also serve several purposes in the field of defense.

Regarding connectivity, satellite communication can reach more remote areas where conventional networks would require heavy additional infrastructure. Additionally, when it comes to reliability, the World Economic Forum had stated (as of September 2020) that satellite communication can help connect 49% of the world’s unconnected population. In this regard, it should be noted that satellite communications, which are used to facilitate telecommunication services, are among the main categories of investment in the space technology sector. Other important categories include spacecraft and equipment manufacturing.

The main thing to remember is that the space route is an integration of the aerospace, hardware and telecom sectors. It is therefore argued that investment in this area would also promote positive spillover effects to other sectors.

Where does India stand in the global space market?

According to SpaceTech Analytics, India is the sixth largest player in the sector globally, with 3.6% of global space technology companies (in 2021). The United States occupies the leading position, home to 56.4% of all companies in the space technology ecosystem. The other major players are the United Kingdom (6.5%), Canada (5.3%), China (4.7%) and Germany (4.1%).

India’s space industry was valued at $7 billion in 2019 and aspires to reach $50 billion by 2024. The main feature of the country is its profitability. India has the distinction of being the first country to reach orbit of Mars on its first attempt and at $75 million – far cheaper than Western standards.

Most companies in the sector, globally, are involved in the manufacture of space equipment and satellite communications. Union Minister of State for Science and Technology, Dr Jitendra Singh, had earlier this month said that out of the 60 start-ups that had registered with the Indian Research Organization (ISRO), the majority of them were involved in projects related to space debris management. As space becomes increasingly crowded with satellites, the technology would thus help to manage “space junk” (debris from old spacecraft and satellites).

The United States and Canada were the top recipients of space-related investment in 2021. Close scrutiny of SpaceTech data indicates that the United States alone has more companies in the sector than the 15 following countries combined. Forbes pointed out in May 2021 that “…it helps when your country’s government budget in the field is six times larger than that of its nearest competitor.” Its space budget was $41 billion in 2021, of which $23.3 billion was for NASA. The research and innovation boost spurred by public spending could also be attributed to the global concentration of a huge number of private investors in the country.

India’s total budget allocation for the financial year 2022-23 to the Ministry of Space was ₹13,700 crore. Moreover, according to data from Tracxn, funding for start-ups in the sector (in India) has almost tripled to $67.2 million on an annual basis in 2021.

How is private sector participation regulated in India?

In June 2020, the Union government announced reforms in the space sector allowing more private actors to provide end-to-end services.

The announcement of the establishment of the Indian National Space Promotion and Authorization Center (IN-SPACe) has been made. It was tasked with promoting, authorizing and licensing private actors to carry out space activities. As a watchdog and regulator, it is responsible for designing mechanisms to share technology, expertise and facilities (where possible) free of charge to promote Non-Governmental Private Entities (NGPEs). . IN-SPACE’s Supervision and Promotion Department oversees the activities of NGPE in accordance with prescribed regulations and reports whether corrective actions or resolutions are required. ISRO shares its expertise in matters relating to quality and reliability protocols, documentations and test procedures through IN-SPACe’s “interface mechanism”.

Additionally, incorporated in March 2019, NewSpace India Ltd (NSIL), is mandated to transfer mature technologies developed by ISRO to Indian industries. All are under the supervision of the Ministry of Defence.

The long-term involvement of the private sector, like other business sectors, is supposed to help stimulate investment and expertise in the field which is capital-intensive and requires cutting-edge technology.

Dr Singh had filed in a written response to the Lok Sabha in June 2021 that the space sector reforms were made with the intention of providing a ‘level playing field’ for private companies in satellites, launches and space services .

The central idea was to provide them with a predictable policy and regulatory environment and further provide them with access to ISRO facilities and assets to enhance their capabilities.

THE ESSENTIAL

Chief science adviser Ajay Kumar Sood said earlier this month that the government would soon come up with a new space policy to increase private sector participation in the industry. Consultations have already taken place and the final version of the policy will soon be forwarded to the Empowered Technology group for further review.

Improved space technology would be beneficial to enhance connectivity and combat climate-related implications in safer and more efficient ways.

The long-term involvement of the private sector, like other business sectors, is supposed to help stimulate investment and expertise in the field which is capital-intensive and requires cutting-edge technology.

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