Indian Space Policy: How Can It Give a Boost to the Emerging Private Sector?

The policy seeks to institutionalise and facilitate access of private sector participation in the space sector.

Not too long ago, The New York Times, in an opinion piece, had 'mocked' the Indian Space Research Organisation (ISRO) after it placed the Mangalyaan robotic probe in orbit around Mars.

An NYT cartoon, which showed a farmer with a cow knocking on the door of a room marked 'Elite Space Club', drew massive ire from not just Indians, but from people in other parts of the world.

The newspaper was quick to apologise, clarifying that the message the cartoon tried to convey was how space exploration is "no longer the exclusive domain of rich, Western countries."

And it appears that things have actually turned around for India in the space space sector.

India's new space policy – recently approved by the Union Cabinet – seeks to institutionalise and facilitate the access of private sector participation in India's space sector.

So, what exactly does the policy say? And how will the policy give a fillip to private participation? Will the roles of the private companies be elevated from being mere vendors? Read on.

What Does the Policy Say?

Among other things, the policy will see the ISRO focusing on research and development of advanced space technologies. 

The policy demarcates responsibility to the ISRO, New Space India Limited (NSIL, a space sector PSU), and Indian National Space Promotion and Authorization Center (IN-SPACe). 

"In brief, the Indian Space Policy will offer clarity in the role of the components set up (in the recent past)," Union Minister Jitendra Singh told reporters on 6 April.

Also, according to Singh, private firms will now be able to build rockets, satellites and launch vehicles, and be involved in data collection and dissemination. "Private sector will gain access to end-to-end space activities," he added.

Meanwhile, ISRO chairman S Somnath said that the organisation will not carry out operational and production work for the space sector.

He reiterated that the space agency will focus its energies on developing new technologies, new systems, and research and development.

The operational part of the ISRO's missions will be moved to NewSpace India Limited, a public sector undertaking under the Department of Space, he added.

2020 – The Year Things Changed in the Space Race

What perhaps heralded the private sector's entry into the space race was Skyroot Aerospace successfully launching India's first private rocket, Vikram-S, from the ISRO spaceport in Sriharikota, in November 2022.

A few days later, ISRO's PSLV-C54 successfully placed Anand, the hyper spectral satellite of Pixxel, and Thybolt-1 and Thybolt-2, two radio communication nanosatellites of Dhruva Space, a private firm, in low-Earth orbit.

What paved the way for these feats was the space sector opening up for private participation in 2020. This could, one government official ambitiously told the media, lead to India's own "SpaceX-type ventures."

As Pawan Kumar Chandana, co-funder of Skyroot Aerospace, explained to The Quint:

"What the policy paradigm of 2020 attempted was to empower private firms within the Indian space sector to establish themselves as independent players capable of end-to-end space activities. And now we see fruition."

Pawan Kumar Chandana, co-founder, Skyroot Aerospace

So, Why Further the Push for Private Participation?

Somanath explained that India's share in the global space economy is less than 2 percent at present. The space policy will help it grow up to 10 percent in the future, he claimed.

As the government said, "promoting the private sector will enable the Indian space program to remain cost competitive within the global space market, and thus create several jobs in the space and other related sectors."

According to the Space Foundation's 2022 report, the global space economy was worth $469 billion in 2021. And most of this money came from the private sector rather than the public sector, the report noted.

The space race in India is largely seen as being dominated by the ISRO. But that is changing slowly. As per the Economic Survey, there have been over 100 active space companies since 2012. 

As Chandana pointed out to The Quint: "It is believed that more than $100 million flowed in as capital into the private space sector of India in 2022. By 2023, the figure is estimated to be triple."

'Private Firms Can Leverage ISRO's Extensive Expertise'

Ratan Srivastava, Managing Director of BowerGroupAsia, a public policy strategy advisory firm, told The Quint that the ISRO will be playing the role that a typical space agency performs, which is development of new technologies, validation, testing certification, etc.

"Additionally, the policy will encourage the private players to graduate from vendors to partners," he added.

Meanwhile, Anirudh Sharma, founder and CEO of Digantara, pointed out to The Quint that the ISRO's guidance can help private companies.

"India has set a lofty goal of capturing 10% of the global space economy in the coming years."

"To achieve this, India needs a well-defined framework that incentivises private companies' growth with support from the government. ISRO has an impressive legacy of achievements spanning several decades, and private players can leverage the space agency's extensive expertise and infrastructure to contribute to the Indian space ecosystem's growth. If India taps into this potential effectively, it can realise its global space ambitions at an unprecedented scale," he explained.

'Having a Clear-Cut Policy Necessary for Attracting Funds'

Sharma also argued that having a well-defined policy is crucial to attract investments.

"By eliminating ambiguities and providing a clear vision for the development of the Indian space sector, the policy provides an open door for private actors. This clarity of vision is essential for private actors to plan investments/even attract funding and operations in the space industry."

Anirudh Sharma, founder and CEO of Digantara

Sharma argued that due to lack of clarity on what the foreign direct investment (FDI) rules are in the space sector, it is difficult to attract funding from foreign entities. Currently, the FDI in space sector is allowed up to 100 percent in the area of satellites-Establishment and operations through government route only, clarified Jitendra Singh.

Moreover, Sharma argued that this policy will enable private sectors to engage in activities previously reserved for the government and its agencies.

"This includes the launch and operation of satellites, the creation of space infrastructure, and the provision of space-based services. By opening up these activities to the private sector, the government is fostering innovation and employment opportunities in the space industry," he reasoned.