Indian space business: An exciting field or a bubble about to burst?

There are plenty of challenges however before the scale is achieved, and not necessarily related to launches. There is a vast unmet insurance requirement

India’s first privately-developed rocket Vikram-S shall lift off in what is called a sub-orbital mission with three payloads, on Friday. The endeavour, though puny, comes just two years into the union cabinet opening the skies for the private sector to join.

Compare this with the results of the now almost 36 years old Aero India show, also meant to promote aerospace among other businesses, which has moved far more slowly. Instead, investor confidence in the fledgling space business seems to have caught on more rapidly, primarily because policy and monetary outlay have moved rapidly together.

In the middle of the global lockdown from Covid in June 2020, the Modi government decided to set up a single-window Indian National Space Promotion and Authorisation Centre (IN-SPACe), under the department of space. Its role was to pull in private sector investment in space. While India is just 2 per cent of the global space industry, it didn’t escape notice that New Delhi’s venture came just a few months after the Trump administration authorised the setting up of the US Space Command that included a critical Space Development Agency to draw in private sector investment, under the National Defense Authorization Act for 2020.  

The space industry would have been considered an oxymoron even a couple of years ago in India. The sector was considered fit for investment only by the public sector. An event like the India Space Congress, held for the first time in October this year, would have seemed inconceivable. That a clutch of leading space tech companies from abroad including Antaris, Dassault, Inmarsat India, Bellatrix Aerospace participated in the first-ever such event, was moved by a significant number. The government of India has more than tripled the allocation for Isro from Rs 4,000 crore in FY14 to Rs 13,700 crore in FY22.

These are big numbers, says former Shailesh Nayak, former chairman of ISRO. “The government will have to continue to provide support financially and with the expansion of the pool of personnel trained at government laboratories, to bring in private sector participation at scale”. He noted that in the USA, the federal government led with massive investment for decades before the private sector was hooked. The government does look like it means business in the sector.

The industry will need subsidies to grow, declared Lt General Vinod G Khandare, Principal Adviser in the Ministry of Defence. “Both industry and scientists have to take account of the peculiar needs of the defence services, like satellites to do foliage and ground penetration for instance”, he explained. These may not have commercial applications and so the government has to defray some of the losses, according to the former Military Advisor to the National Security Council Secretariat.

The bait is the size of the industry. Around the same time when the Indian government was setting up IN-SPACe in 2020, a Morgan Stanley research noted that the global space industry could generate revenue of more than $1 trillion or more in 2040, up from $350 billion, currently. About half of that number could come from satellite broadband to power internet data usage.

For India to claw into the market, a lot of discussion is needed, said Nayak at an event organised by RIS, Delhi based think tank. According to him, to develop scale in that satellite broadband market, Indian companies cannot just depend on the domestic market, even though it is vast and growing. “The deep investment in the Indian market is necessary for the companies to show abroad, especially the global South that they have the commitment to last the course”.

According to Ambassador Bhaskar Balakrishnan of RIS, the services that the Indian space industry can provide is highly relevant to the needs of developing countries. “India’s stake in the business abroad has a great potential to grow once downstream services can create supporting space services ecosystems”, he added.

He said the policy rules coming up will fix the government's role only around regulation of the space business. Echoing him, Nayak said organisations like Isro will continue to play a significant role in deep space missions beyond the Earth’s orbit.

The near-Earth and even sub-space orbits, where the Hyderabad-based firm Skyroot Aerospace plans to send up Prarambh will be populated by the private sector to provide commercial services for banking, insurance, agriculture, urban management, and emissions control.

There are plenty of challenges before the scale is achieved, and not necessarily related to launches. There is a vast unmet insurance requirement. No Indian company has the wherewithal to provide these covers, yet these are essential, said Anil Prakash, Director General, Satcom Association of India at a panel discussion earlier this month. “The insurance liability has to be undertaken by the government. This is what, we from the industry, shall request from the government of India to pick up”, he said.

Estimates suggest there are already more than 100 startups in deep space tech in India. For most of them scaling up credit from the banks shall depend on the availability of insurance. Space insurance is a volatile market, writes Nicholas Borroz, the founder of Rotoiti, a New Zealand-based consultancy that supports the space industry with market research and related services. Since there are very few insurers, just one accident can shrink global capacity, shooting up premiums. In India, only New India Assurance writes space insurance.

In the absence of insurance, companies will need some other financial support from the government. Parliament data shows till August this year, only six startups were selected and supported by Isro for a minuscule amount of Rs 50 lakh each, to develop in areas like geospatial information, propulsion, and robotics, and augmented reality and virtual reality. It is not just new ventures. Bharti group's OneWeb has already deployed 36 low-earth orbit satellites. With 462 satellites in space, the company has launched 70 per cent of its planned fleet.

Yet, as another expert Lt Gen P J S Pannu, distinguished fellow at the United Service Institution of India, a national security and defence services think tank based in New Delhi, said, India has to push the envelope fast to secure a space in the global commons. “We should not get into space denial but acquire space assets at a fast clip. Over the Indian skies, 60 per cent is dominated by assets of the USA and China. Yet any occupation of space by others will work to our disadvantage in matters of national security”, he said. This realisation should drive our space progress, said the Lt General. NaviC India's domestic GPS is not fully operational because more than one of the seven satellites has outlived its useful life. The slightly delayed launch of Vikram-S needs to see many more repeats, at a fast clip.