The setback, India's first after 39 successful missions, was all the more significant because the private sector was involved in the assembly of the spacecraft for the first time in the country's space programme.
Describing the failed mission as a "mishap", ISRO Chairman Kiran Kumar said the heat shield did not separate on the final leg of the launch sequence. As a result, the IRNSS- 1H, a backup navigation satellite, got stuck in the fourth stage of the Polar Satellite Launch Vehicle--PSLV-C39.
The eighth satellite was a back-up navigation satellite for IRNSS-1A, one of the seven satellites in the constellation, as its three rubidium atomic clocks on board had stopped functioning.
For the first time, the private sector has been actively involved in assembling and testing of a satellite unlike earlier where its role was limited to supplying components.
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On September 20, 1993, the first development flight PSLV-D1 was unsuccessful in launching the IRS-1E remote sensing satellite into orbit.
Today's PSLV launch was the third this year with everything appearing normal since the lift-off at 7 pm till the rocket reached the fourth stage where it was supposed to inject the satellite into orbit.
However, the expected sequence did not happen and the mission director and other senior ISRO scientists were seen in a sombre mood, indicating all was not well.
"We are looking into the details of what has happened and we will do the analysis and subsequently come back with the details," Kumar later told reporters.
At this point of time, the basic thing was that all aspects--the launch vehicle, first stage, second stage, third stage, fourth stage, separation part and all the events performed normally, he said.
"Because the heat shield is not separated, the satellite remains inside the fourth stage and even satellite separation also we could see from the camera images that the satellite is moving inside the enclosure. So, this mission has been an unsuccessful mission," Kumar said.
ISRO had earlier launched seven satellites - IRNSS-1G on April 28, 2016, IRNSS-1F (March 10, 2016), IRNSS-1E (January 20, 2016), IRNSS-1D (March 28, 2015), IRNSS-1C (October 16, 2014), IRNSS-1B (April 4, 2014) and IRNSS-1A on July 1, 2013.
According to ISRO, the total cost of all the seven satellites was estimated at Rs 1,420 crore.
The Indian Regional Navigation Satellite System (IRNSS) is an independent regional navigation satellite system developed by India on par with US-based GPS. Russia has 'Glonass', while 'Galileo' is by Europe.
This constellation was earlier named 'NavIC' (Navigation with Indian Constellation) by Prime Minister Narendra Modi.
The NavIC system has many uses including for fishermen venturing into sea, guiding merchant ships to navigate, tracking of railway movement and alerting road users near unmanned level crossings.