India's space ambitions: Market forces are with us
Summary
- Policy emphasis, coupled with enhanced geopolitical influence, could bolster our space economy after the opening up of this sector placed it on an upward trajectory.
The Indian startup ecosystem within the space sector stands out as a remarkable success story, where technology innovators harness their expertise to craft solutions aimed at not only fostering self-sufficiency, but also positioning India as a global front-runner. From ambitious ventures to celestial bodies like the Moon and Mars, and even to an observation post for the Sun, India’s space endeavours have renewed enthusiasm among aspiring spacefarers. With notable achievements like the Chandrayaan-3 mission, India has consolidated its status as a major space explorer.
India, now recognized globally as an economic powerhouse, is poised to reap substantial rewards from the space technology industry. With the sector’s value projected to exceed $360 billion by 2025, its scope has expanded far beyond space exploration, encompassing satellite communication, earth observation and an array of innovative applications. India currently commands just about 2% ($7 billion) of this lucrative market.
In the Indian context, the necessity for adept geopolitical strategies and astute management of space-tech investments and innovation arises from an acknowledgment of the space economy as a pivotal industrial frontier for the 21st century.
Beyond scientific exploration, space technology increasingly underpins economic competitiveness and national security through satellite communications, navigation systems and remote sensing capabilities. Hence, the judicious steering of space investments is vital to capitalize on opportunities while deftly addressing geopolitical challenges to safeguard India’s interests and underscore its standing as a significant player in the global space sector.
Despite having only modest resources at its disposal, the Indian Space Research Organisation (Isro) has meticulously crafted a well-rounded space programme ecosystem. Over the past six decades, India’s space efforts have played an impressive role in tackling pressing challenges. Even Indian welfare programmes draw upon our space capabilities, whether it’s the need to disseminate crucial information to farmers on optimal farming practices aligned with climatic conditions, or implementing measures for disaster relief and prediction.
Traditionally, the space industry has concentrated on establishing systems and infrastructure meant for exploration. Historically dominated by affluent nations and wealthy entrepreneurs, the post-launch space economy is now undergoing reinvention, offering opportunities for wide participation. The sector is expected to grow at a remarkable compounded annual rate of 48% in the next five years, reaching a substantial value of $50 billion within the country.
In recent years, the Indian private sector, including space-tech startups, has been granted access to Isro facilities and other strategic assets, enhancing their capabilities significantly. This has fostered innovation in a sector previously deemed shut for many, generating employment opportunities and facilitating skill enhancement. The goal for India’s space startups is integration with the global space ecosystem by harnessing a vast pool of Indian engineering talent.
In the last three years, the Indian space startup sector has witnessed substantial funding, propelled by growing demand for space-based solutions and efficient satellite production, coupled with lower launch expenses and advancements in complementary technologies like AI and 3D printing. Public-private partnerships are playing a pivotal role in boosting growth within the space sector. Government policies, including its encouragement of startups and GST-exemption offers, have further incentivized private space ventures. However, limited investor enthusiasm for later development stages is a concern.
Government reforms in this sector include a relaxation of foreign direct investment (FDI) regulations. The Centre has permitted FDI under the automatic route in the space sector up to 74% for satellite making, 49% for launch vehicles and 100% for manufacturing components and systems. These relaxed rules will empower Indian space startups to tap global capital. Consequently, Indian space startups can now explore innovative business models. Moreover, there is a pressing need to bridge the gap between space technology and practical applications. We also need to acknowledge the strategic significance of dual-use capabilities that require a judicious balance of their commercial potential with their implications for our national security.
The Indian space technology industry offers Indian companies an opportunity to excel on the global stage. However, as they venture into the international arena, they would become vulnerable to geopolitics and market fluctuations. In a world characterized by the convergence of technology and geopolitics, with international sanctions, trade disputes and diplomatic tensions refusing to ease, India’s space endeavours must not end up susceptible to adversities brought on by the broader geopolitical landscape. As a space gold rush gets underway, countries will focus on their own interests.
Sustained government emphasis, coupled with enhanced geopolitical influence, would bolster the Indian space economy. India has the potential to not only elevate its standing, but also contribute significantly to the advancement of the global space economy. There’s no better way to foster collaboration on an international scale.
