Indian Commercial Space Sector and the Path Ahead

The Indian government is set to bring in long overdue reforms in the commercial space sector aimed at encouraging foreign investment, private participation and technology transfers while simultaneously aligning Indian policies with international norms.

Jyotsna JayaramPartner

Sindhu AAssociate

Varnika JainSenior Associate – KM

The entry of private players into the space domain has heralded a revolution of sorts and showed the world the true potential of commercial space activities. Space tourism has also fast become a reality, with Virgin Galactica and Blue Origin joining the fray. While space has always been an area that governments want to retain strategic control over, private participation brings with it capital, resources, a re-energised vision, technological advancement for the overall development of the sector. Realising this potential, space regimes across the world are re-orienting to allow for private participation whilst retaining certain critical decision making with the government. India itself is no stranger to the space race, finding a place for itself in the elite group of six government space programmes with full launch capabilities. However, the key representation in these programmes was largely limited to the Department of Space (DoS) and the Indian Space Research Organisation (ISRO) with private players providing nominal manufacturing support.

While ISRO has always been actively involved in knowledge sharing, R&D and tech transfers, its monopoly over participation and operation of communication-based space assets is an issue plaguing the Indian space sector by restricting the entry of private players. India’s participation also has been largely limited to rocket launches and it has not made significant movement in space-based communication activities. Further, the regulatory framework governing the Indian space sector has remained static since 1997 when the first Satellite Communication Policy was framed with the operation of the space sector solely being vested with the DoS and ISRO.

The need to have a more up-to-date and uniform law for the commercial space sector, coupled with the long-standing demand of industry participants to liberalise the sector to make it more investor friendly, has prompted the Indian government to propose a slew of reforms between 2020-2021. In this article, we analyse the key features of these proposed regulatory reforms and the future of the Indian commercial space sector.

  • Proposed Space Policy Reforms

    With an objective to reform various aspects of space exploration, the Indian government has released the following draft Bill, policies and guidelines.

    The Draft Space Based Communication Policy of India, 2020 aims to promote increased participation of the private sector to provide space-based communications.

    • The Space Activities Bill, 2017- The Bill will facilitate enhanced participation of non-governmental and private sector agencies in space activities in India.
    • The Draft Space Based Communication Policy of India, 2020 - This policy aims to promote increased participation of the private sector to provide space-based communications.
    • The Draft Space Based Remote Sensing Policy of India, 2020 - To enhance commercialisation of space technology, this policy encourages participation in space based remote sensing activities.
    • The Draft Norms, Guidelines and Procedures for Implementation of Space Remote Sensing Policy, 2020 - The draft guidelines set out procedural aspects around the commercialisation of space technology.
    • The Draft National Space Transportation Policy, 2020 - This policy seeks to incentivise the space transportation sector for Indian companies and encourage increased investment from private players in the sector.
    • Revised Technology Transfer Policy Guidelines, 2020 - The guidelines aim to maximise access to, and transfer of government generated technology to private players for development of the space industry as a whole.
    • The Draft Humans in Space Policy for India, 2021 - This policy seeks to govern activities under the Indian human space programme.

    Additionally, on 15 February 2021, the Indian Department of Science and Technology issued final Guidelines for acquiring and producing Geospatial Data and Geospatial Data Services including Maps, 2021 (Geospatial Guidelines) to liberalise the geo-spatial sector in India. Amongst other things, the Geospatial Guidelines make remote sensing more widely available to private technology companies.

    While most of these reforms are still either under active government consideration or in the public consultation phase, they have nevertheless given rise to a flurry of activity in the Indian commercial space industry in anticipation and preparation for when these reforms will be implemented.

    Important features of the Proposed Reforms

    • Private Participation

      Historically, private sector participation in the Indian space sector was limited only to the supply of components and sub-systems. To liberalise the sector, one of the main objectives of the space reform policies is to move the focus of private participation from a vendor or supplier role, towards involvement in every sphere. Taking a cue from the US and China, the policies intend to leverage the private sector for complex missions and operations, rather than just for manufacturing support.

      In March 2019, the Indian government established NewSpace India Ltd. (NSIL), a public sector undertaking to, among other things, transfer small satellites technology, production of the Polar Satellite Launch Vehicle (PSLV), and marketing of associated technology, to the private sector. To supplement the draft space reform policies and guidelines, the government also established the Indian National Space Promotion and Authorisation Centre (IN-SPACe) to ‘hand-hold, promote, and guide the private industries in space activities’. IN-SPACe is designed to act as an autonomous nodal agency in the DoS to aid private companies in accessing Indian space infrastructure, i.e., ISRO’s facilities, and engage in building and launching rockets and satellites. Thus, in essence, IN-SPACe acts as the regulator for private players.

    • Foreign investment

      There is no separate sector for space under the consolidated foreign direct investment policy although the satellites and telecommunications sectors taken together are generally considered to make up the space sector. While foreign investment of up to 100% is permitted in the satellites sector, it is currently completely under the government approval route and requires authorisations from the DoS and other relevant government agencies/departments.

      However, news reports indicate that the government is expected to announce a revised foreign direct investment policy that would open up investment opportunities for foreign companies in the commercial space sector.

      The liberalisation of commercial space in India is proposed to take place in a graded manner – with private participation first opening only for Indian entities. However, the draft space reforms policies do not bar foreign investment in such Indian entities, nor do they prohibit foreign subsidiaries from participating. Therefore, the reforms are likely to incentivise foreign investment.

    • Technology transfers

      The Government has acknowledged that sharing of government generated technology with private players and providing them access to government facilities will boost growth in the industry, contribute towards technological self-reliance and national development in India. Accordingly, in October 2020, NSIL was tasked with identifying and enabling the commercialisation of technologies developed by DoS/ISRO.

      However, to provide further impetus to the industry and drive it towards complete self-reliance, there is a need to open up access to foreign technologies as well. Foreign investment generally brings with it the benefit of technology transfers and therefore, the opening of the Indian commercial space industry to foreign investors will be one method of amplifying technological advancement within India.

    • Homogeneity with international laws

      The space reforms will finally provide a uniform space legislation in India with the various policies and guidelines working in conjunction to bring out the full import of the reforms.

      Additionally, in an industry like commercial space which benefits from coordination, cooperation, and competition with foreign companies and agency counterparts, it is imperative for domestic laws to be in sync with foreign laws and international best practices.

      India is also a party to various international space treaties. The future of space exploration, communication, space tourism, human space flights, etc., will depend on the homogeneity between Indian and international laws and the proposed space reforms are a step in that direction.

  • The growth of public-private partnership will likely enhance the development of space/satellite-based networks and communication technologies.

  • A Look Ahead

    Historically, India lacked advanced space-based communication technologies, despite having robust ground systems and applications. However, it is now catching up to increase its presence in this domain as well with ISRO reportedly experimenting with satellite-based quantum communications. The Unified License (UL) framework was recently amended to allow commercial VSAT operators to provide satellite-based cellular backhaul connectivity to the access service providers, which allows the usage of satellite capacity to provide other services such as telecom and broadband services. This is in line with Telecom Regulatory Authority of India's (TRAI) 'open sky policy' for VSAT operators and VSAT service providers to work directly with any international satellites. The growth of public-private partnership will likely enhance the development of space/satellite-based networks and communication technologies. This will provide high-speed and affordable connectivity to even the remotest areas of the country.

    These reform measures are likely to provide a much-needed boost to the sector. While still in the consultation phase, the revamped policies and framework are already garnering traction; Skyroot Aerospace and Agnikul Cosmos are two Indian space start-ups that are building their own rockets.

    However, to fully liberalise the space sector, there is a need to harmonise the requirements under the proposed reforms and existing laws. Challenges currently faced by private players that come with lack of certainty under existing regulations must be resolved. Existing regulations must be repealed or amended accordingly to avoid regulatory ambiguity and to make way for the effective implementation of the proposed reforms.

    While we are still a few years away from putting humans in space and exploring space tourism in full earnest, it will be interesting to see how commercial space activities, foreign investment, private participation and the start-up sector are driven by the proposed space policy reforms going forward.

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