Strengthen space reforms for this sector to attain lift-off
4 min read . Updated: 30 Dec 2020, 09:21 PM IST
PremiumIndia needs a policy mix that nurtures and secures this new industry but does not suffocate it
The Department of Space (DoS) is on a hyperdrive of space sector reforms. In May 2020, it pledged to allow home-grown space companies access to Indian Space Research Organization’s (Isro’s) cutting-edge laboratories and hardware testing infrastructure. Some of these nascent rocket and satellite startups are now signing up with the DoS to evaluate their prototypes and move to the next phase of their space business development cycles.
It hasn’t come too soon. A tremendous democratization of near-Earth space has taken place in the past decade. Countries big and small, including Bangladesh, Luxembourg, Australia, New Zealand and the UAE, have created space programmes. Germany and the UK, which had cutting-edge satellite and spacecraft competence, have recently entered the contest for low-cost space-launch vehicles. All these countries have long been customers of Isro, but soon they will have contracts at home and regionally. The democratization is accelerating the marriage of Industry 4.0 technologies to the space sector, leading to a second space age.
India has been late to the private space play. Though the DoS has over the decades nurtured a few private space companies by empanelling them as vendors, the rapid global entry of multiple players to the business of outer space has made it think more strategically. The reforms will enable the DoS to convert these empanelled companies into a full-fledged national space industrial ecosystem. It intends to act as a coach, not a nanny. Can it keep this delicate balance?
A lesson can be learnt from the mythological Greek architect Daedalus, who built wings of wax for his son Icarus, so he could fly. But Icarus flew too high, the sun melted his wings, and he fell into the sea. In India, the DoS must ensure that the delicately unfolding wings of the private sector do not send it flying too close to the sun—or too low near the sea. The current reforms only prevent the private sector from flying too low near the sea of technological stagnancy and from falling behind its peers in this second space age. They do not have enough precautionary measures to prevent India’s space Icarus from flying too high.
India’s space technology startups are far from acquiring big SpaceX-like valuations. Most are pre-seed and seed-stage players, investing below $2 million. Beyond that, even if they mature and demonstrate success using the new access to Isro facilities, there is a major finance gap to worry about: a near-absence of large capital-expenditure financing entities in India that can fund space startups at their Series-A and subsequent funding stages. There is plenty of foreign interest—almost $10 billion as venture capital was deployed in 2019—but negligible levels of domestic venture capital or private equity, even as market mechanisms that could provide funding to the tune of $50 million and upwards remain weak.
In this scenario, exacerbated by the economic upheaval of the covid pandemic and China’s intensified techno-political ambitions, many space startups of importance to India’s civilian and military space ecosystems will either part with large stakes or be acquired by overseas investors—a potential national security hazard.
A lesson is also to be learnt from Germany, which earlier this month cited a national security threat to block the acquisition of domestic satellite and critical technology manufacturer IMST by Addsino, a subsidiary of China’s state-owned China Aerospace and Industry Group.
The Indian government must urgently constitute an inter-ministerial cabinet committee on futuristic science and technologies (CCFST), which includes the DoS, and prepare to ward off takeovers in India’s fledgling space sector. A key agenda item of the CCFST should be to sustain the country’s space sector with predominantly Indian capital. The CCFST can be tasked with vetting foreign direct investment, creating a clear regulatory environment, and crafting as well as overseeing future-ready industrial, financial and security policies for new science and technologies. Additionally, the CCFST must maintain a national security-oriented vigil on foreign dominance of all manufacturing, technology, and research and development in India that must not be compromised, as also on their supply chains and economic impact. The key is to coach this strategic sector without being over-protective.
In 2017, Ted Cruz, a Texas senator and member of the US Senate Commerce Subcommittee on Space, Science and Competitiveness, said, “The first trillionaire will be made in space." Nations with a comprehensive government-military-finance-technology-policy and industrial complex will be the first to create such a trillionaire. India should have ambitions in this sphere, as the space sector can leapfrog the country to a future of 21st century industrialization.
The sector is like the divine wish-fulfilling tree Kalpavriksha of Indian legend. Every minute mechanical component, every material, every microelectronic element, and every drop of fuel that emanates from the space sector must find utility across non-space industries. Many of these could be enablers of incremental but vital innovations that will eventually assist India’s socio-economic upliftment. Green shoots of this tree have emerged after seven decades of India’s techno-political manthan (churn), and the DoS in cooperation with the proposed CCFST with an expanded agenda can enable it to bloom at last.
Chaitanya Giri is fellow for space and ocean studies, Gateway House: Indian Council for Global Relations
