Space Economy

Why in the News?

In Budget 2024-25, it has been announced that a venture capital fund of Rs. 1,000 crore will be set up to promote space economy in the country. 

More on the News

• This venture capital fund will provide finance to the Space tech startups and small- to medium-sized enterprises at different stages of its life cycle according to requirements. 
• It will supplement initiatives like Seed fund scheme, launched by the Indian National Space Promotion and Authorization Centre (IN-SPACe) in 2023. 

Need of Promoting Space tech Start-ups and Private Sector in Space Sector 

• Reducing import dependency: India’s import costs in the space technology sector are 12 times higher than the earnings from exports (2021-22).
  • The major imported items include electronic and electrical engineering components, high-strength carbon fibres, space-qualified solar cells, etc. 
• Freeing up the ISRO from ancillary activities: Space entrepreneurship could free up ISRO to focus on the core areas of research and development such as interplanetary exploration and strategic launches.
• Shift from supply driven model to demand driven model: Almost every major sector of the economy would benefit from integration of space technology. For example, satellite data uses in urban development. 
• Global Competitiveness: Foreign private companies like SpaceX, Blue Origin, Arianespace, etc.  have transformed the global space industry by cutting costs and turnaround times. 
  • However, India’s private space players have mainly served as vendors or suppliers to the government's space program.
  • Therefore, to provide them a level playing field, Centre allowed them to carry out end-to-end activities in the space domain.   
• Connected socio-economic benefits: By finding innovative solutions to pressing challenges in areas such as agriculture, disaster management, or communication.
  • Also, Indian space sector is projected to increase at a ~48% CAGR over the next five years to reach US$ 50 billion. 

Private sector participation in Space

• There are more than 200 space-based start-ups in India. 
• In 2022, Vikram-S, India’s first privately built rocket was launched under ‘Mission Prarambh’. It was developed by Hyderabad-based Skyroot Aerospace.
• NSIL and Hindustan Aeronautics Limited (HAL) exchanged the MoU for producing PSLVs. L&T is partnering with HAL in the consortium.
• IIT Madras-incubated startup Agnikul Cosmos test launched the indigenously designed and developed world's first rocket with a single-piece 3D printed engine. 
• OneWeb India recently became the first company to receive approval from Indian space regulator IN-SPACe for providing satellite broadband services.

Challenges in Promoting Start-ups and Private participation in Space Sector

• Regulation Issues:
  • Multiplicity of regulations. E.g. approvals needed from DoS, ISRO, Antrix corporation etc.
  • Absence of a dedicated and independent regulator. ISRO acts both a as regulator and operator in the sector.
• Risky Nature of Industry: Absence of assured market and long incubation periods lead to a cautious approach by private organizations.
• Funding Constraints: Indian investors prefer safe investments like 5G rather than long-term, high-risk investments in space technology.
  • Lack of indigenous materials and high reliance on imports increases costs and causes production delays.
• Security and strategic concern: Rising private sector participation increases security concerns like potential interference of foreign entities etc.
• Other: Limited Talent Pool, increase in space debris with growing space economy, etc. 

India’s Initiatives to promote space-tech entrepreneurship

• Key organisations
  • IN-SPACe: An autonomous agency under the Department of Space (DoS). 
  • Its role includes regulating, promoting, guiding, monitoring, and supervising the space activities of Non-Governmental Private Entities (NGPEs) in India.
  • Antrix Corporation Limited (ACL): A commercial arm of ISRO, was setup in 1992 and is a wholly owned Government of India Company.  
  • New Space India Limited (NSIL): Schedule 'A' Category Company under DoS. It was set up in 2019, to handle the commercial activities of ISRO. 
  • Indian Space Association (ISpA):Established in 2020, ISpA is an apex non-profit industry body, setup for development of the private space industry in India.
• Key Initiatives
  • Indian Space Policy 2023: Enables end-to-end participation of Non-Government Entities (NGEs) in all domain of space activities.
  • Foreign Direct Investment (FDI): Recent amendment in FDI policy allowed 74% FDI for satellite manufacturing and operation, up to 49% FDI for launch vehicles, spaceports and associated systems etc. 
  • SpaceTech Innovation Network (SpIN), public-private collaboration for start-ups and small and medium- enterprises in space industry.
  • Tax benefits: Satellite launches are exempted from GST.
  • Atal Innovation Mission (AIM)
    • ATL Space Challenge: AIM in collaboration with the ISRO and CBSE launched the Atal Tinkering Lab (ATL) Space Challenge. The challenge encourages students to find efficient and innovative solutions for specific, real-world challenges in the Space sector. 
    • Atal Incubation Centre (AIC) Scheme: AIM has supported more than 15 startups working in Space Tech and related industry across India. The focus areas for these startups are in UAV, Drone and Surveillance Equipment, Aero tech, Air Taxi, Space debris tracking and monitoring service, space education among others.
  • Mentoring: List of retired ISRO subject experts is published on IN-SPACe Digital Platform (IDP). NGEs can approach these mentors directly for expert advice etc.

Way Forward

• Enact Space Activities Act: It will further provide clarity, focus, and propulsion for the industry.
• Mapping of current value chain of the sub-segments: Identification of challenges (technology, business and adoption), trends and global benchmarking to define the problem for market creation.
  • Also, facilitating government contracts for private start-ups to foster market demand. 
• Capacity building: It includes emphasizing on academic programs for systemic development. For instance, investing in training programs to enhance skills in systems engineering.
• Building synergy in the sector: Ensure partnerships between start-ups, ISRO, and foreign companies to access expertise and markets. 
• Other measures: Augmenting Technology Development Fund Corpus, viability gap funding, etc.