With A Nudge And A Push From The Govt, Space Emerges As The New Frontier For India Inc.

Among these eight companies were legacy firms like Larsen and Toubro (L&T), Bharti Enterprises, which had their presence in the space industry for many years, as well as SMEs like Alpha Design Technologies and new startups like Agnikul Cosmos, Skyroot Aerospace, MapmyIndia, PIXXEL, Space Kidz India. 

The Prime Minister opened the meeting by saying that the government wanted to free up the space sector and invited each of them to share their thoughts at the meeting, which lasted two hours. He also asked the companies to form a space industry association.    

When it was the turn of the Indian Space Association chairman, Jayant Damodar Patil of Larsen and Toubro (L&T) to speak, he pointed to India's success rate in launching satellites, one of the best in the world, and exuded confidence that the number of satellites the country launches can be easily scaled up from 5-6 a year to 100 with private sector participation.

Although there were a few sceptics at the meeting, the formation of the Indian Space Association has since acted a catalyst in jumpstarting India’s private space industry. Today, India’s space sector is aiming for the stars beyond the historically strong role that the government played through the Indian Space Research Organisation (ISRO).

The private sector has started to play an important part, first, through large companies like Tata Advanced Systems, Bharti Enterprises-backed OneWeb and Larsen &Toubro and, second, through scores of startups that are dotting the landscape. 

For example, the first spy satellite to be made by an Indian private player – Tata Advanced Systems Ltd – will be launched by SpaceX in April this year from Florida. There has also been a remarkable surge in startups from just one in 2014 to about 200 at the end of 2023. 

Consequently, private investments have seen more than US$ 200 million invested till now with about US$119 million funding in 2022 alone. This paradigm shift has resulted in the emergence of numerous private companies and start-ups that today drive innovation, competition, and accessibility into the space economy. 

So, what is driving the private space industry by leaps and bounds? “The Indian space sector stands at the cusp of transformational change driven by positive regulatory enablers, global recognition, and Indian private sector’s dedication,” said Chandrajit Banerjee, Director General, Confederation of Indian Industry,  

Government Policies And Encouragement 

Perhaps the most crucial driver has happily been progressive government policies and reforms. On February 21, the Union Cabinet approved the amendment of the foreign direct investment (FDI) policy for the space sector to allow up to 100 per cent FDI under automatic route for manufacturing components, systems and sub-systems for satellites, ground segments and user segments. 

For manufacturing and operation of Satellites, FDI up to 74 per cent is now allowed through the automatic route, while the same is capped at 49 per cent for FDI in launch vehicles and associated systems or subsystems and the creation of spaceports for launching and receiving spacecraft. Any FDI beyond 74 per cent and 49 per cent in these two categories respectively will require government permission. 

This was a shift from the older policy that dictated that any FDI in manufacturing and operating satellites could be done only with prior government permission. 

The Indian Space Policy set out in 2023, also brought out guidelines for Non-Government Entities (NGEs) in setting up their businesses. Innovative schemes like that of seed fund for selected start-ups to transform their ideas into products and services were launched in December 2023 by the government-promoted IN-SPACE. 

The much-awaited Space Activities Bill is also expected to redefine and refine the picture better and attract more investments in the Indian space sector. 

The Indian Space Policy, 2023 provides a comprehensive framework and vision for the future of the Indian space programme. One of the key highlights of the policy is the emphasis on greater private sector participation throughout the value chain of the space economy.

This opens up opportunities to engage in a wide range of activities, including communication services, remote sensing, navigation, satellite manufacturing, launch infrastructure, space mining and emerging use cases of space in everyday life. The government has also extended the Goods and Services Tax (GST) exemption on satellite launch services available to ISRO, Antrix and NewSpace India Ltd (NSIL) to other private organisations as well. 

Coming Of Age Of The Private Sector

Today, private companies including the large ones and the startups are creating disruptive products and services that cater to commercial markets. They are now actively involved in research and development, generating proprietary technologies and intellectual property besides launching satellites. 

The industry segmentation across the value chain encompasses various domains, including upstream, downstream, and auxiliary activities. Upstream activities involve satellite manufacturing, launch services, and space transportation. 

Downstream activities encompass using satellite data for a wide range of applications, such as earth observation, communication, and navigation. The auxiliary segment comprises supporting services and technologies that enhance space operations.

L&T’s space journey began as early as 1971. The company was asked by the government to contribute to this sector. So, the first ever launch vehicle that India's ISRO built was involved with L&T to develop manufacturing processes and technologies for the launch vehicle - solid rocket motors demand high manufacturing precision and involve materials much stronger than normal steels.  The SLV3 motor developed then was one metre in diameter. Today, the largest motor used in GSLV / LVM3 are 3.2 m in diameter.

Since then, L&T has been developing an entire series of launch vehicles SLV3, ASLV, PSLV, GSLV  GSLV MK-III (now called as LVM3)  and the latest LVM SSLV.  In addition to building rocket motors, L&T has been manufacturing Satellite sub-systems viz. Micro-thrusters, solar array deployment devices, heat shields etc. 

Besides contributing to building independence in space grade materials, creating special (denial technologies) test facilities such as Hypersonic Wind Tunnel & High Altitude testing facilities, and ultraprecision angular motion simulators. Not to stop with this L&T L&T-built Radars track the launch vehicles, the Antenna of the Deep Space Network system enables deep space communication, as also built SATCOM gateways for data uplinking and downlinking from Geostationary satellites.

Patil, who is a Member of the Executive of Management Committee and Advisor, Defence and Smart Technologies L&T, said that the space division of L&T was one of the smallest business units under the Defence division but “is large on its commitment” to this national priority.  

Recently, Sunil Bharti Mittal said that OneWeb, both in India and globally is ready to launch its satellite-based broadband services in the country, and is waiting for a final go-ahead from the government. “Our primary focus is in B2B (business-to-business), and we are not in B2C (business-to-customer) at all. We focus on use cases like military, navy, army, oil, and gas, enterprise, warehousing, industrial application, and cellular backhaul”.

He added, “The satellite portal network site is in Mehsana, Gujarat, and is now ready. We have done some trials, and everything functions very well. Now, the spectrum assignment has to be done.” 

At another level, one of the leading startups is Bengaluru-based Pixxel, a space data company, building a constellation of hyperspectral earth imaging satellites and the analytical tools to mine insights from that data. 

The constellation is designed to provide global coverage every 24 hours, with the aim of detecting, monitoring and predicting global phenomena. 26-year-old Founder and CEO, Awais Ahmed says that “as a child, he loved everything about space.” 

After he graduated from BITS, Pilani, he joined Hyperloop India from where he got the vision to start Pixxel. He said, “That was a starting point. I decided to do something for India and the world in the space sector.” Investors have put their confidence behind the venture which has a bevy of private equity companies like Lightspeed, Radical Ventures and Silent Ventures funding it.  

Global And Local Collaborations

In 2023, India joined the Artemis Accords agreement, a global initiative that was conceived and spearheaded by NASA to put humans back on the moon by 2025. 

In 2021, India’s Department of Space and Australia’s ASA made an amendment to an earlier bilateral MOU and extended the cooperation activities in earth observation, satellite navigation, space situational awareness, and the establishment of the transportable terminal in Australia to support India’s Gaganyaan programme. Some Australian start-ups also have collaborations with a few Indian private players. 

As the space sector is extremely capital-intensive, conducting R&D for already existing technologies would be an additional cost, both in terms of time and money. Over the years, ISRO has developed many technologies and expertise in various aspects of satellite development, launch systems, and space exploration. 

By transferring these technologies to the private sector, it has been enabling emerging companies to build upon ISRO's foundational technologies, reducing their development time and costs and helping them build advanced technologies. In addition, DOS has allowed to use its infrastructure for the end-to-end development of technologies. 

ISRO's technology transfer programme, currently facilitated by NSIL, has been instrumental in commercialising technologies developed by ISRO. More than 400 technologies have been successfully transferred to about 235 industries since the 1980s.  

Way Ahead

The major challenge faced by the space industry is to build space culture in new entrants/start-ups as also build end-to-end Mission Capabilities in the Industry that was all along ISRO’s exclusive domain. To address this Govt has trifurcated the space sector into “IN-SPACe” - the Regulator and Promoter; “NSIL”, as the commercial arm, and ISRO to focus on advanced research & Space exploration. The IN-SPACe is thus handholding the new entrants into the space sector in more ways than many.

Further, Patil added, “I see that we have a clear road map ahead & the first actionable step is ‘Decadal Vision for Indian Space Economy’ to grow from current $8.4 billion to $44 billion. Going forward, the bulk of work in the space sector is not going to be in satellite and launch vehicle building,  about less than 15 to 20 per cent of the space economy, but 80 per cent of the value will come from downstream segments to receive space data, processing it, be it for geospatial, navigation, communication, telemedicine, education, surveillance, situational awareness and space intelligence.”

The market potential is huge. Globally, the space market is worth about US$400 billion, of which India’s share is about 2-3 per cent. The aim is that in about a decade, with the private and public sector participation, India’s is targeted to rise to about 8 per cent i.e. US$44 billion 25 per cent. By 2047 the same could see growing to about 25% leveraging India’s market leadership in IT-enabled services Clearly, space is the new frontier for India Inc.