NEW DELHI: India’s approach to outer space activities has changed drastically since the May 2020 reforms were announced. Remember the days when budgetary allocation to the Indian Space Research Organization (ISRO) was the only thing discussed regarding space activities. The Amritkaal 2022 Budget Speech of Finance Minister Nirmala Sitharaman has finally dislodged the term ‘space programme’ and brought in the more futuristic lexicon while describing space activities. The word used is not space-sector but a futuristically far-reaching ‘space economy’ and the Indian government finally sees it as an avenue of sunrise opportunities.
The Narendra Modi administration has been working towards a comprehensive supply-side strategy to a multi-decade economic expansion and reduce the absolute dependence on managing merely demand. To that end, reducing impending tax regimes, simplifying government clearances, sectoral deregulation, privatisation and production-linked incentive schemes have been the tools for implementing the supply-side strategy. Additionally, the government is also engaging in a diligent disinvestment strategy to eliminate vestigial stakes in entities that can be extensively commercialised.
After the announcement of Make in India in 2014-15, India increased FDI in the space sector. However, investments did not come through because of lack of clear regulations and the massive end-to-end governmental control over space activities. The 2020 reforms worked on four fronts—privatisation, simplification of government clearances, domain-specific policymaking, and sectoral deregulations. The four fronts have now generated momentum, as is evident from 2021-22 Economic Survey’s statistics on the large number of space startups established since 2020. The four fronts are well assisted by the Indian National Space Promotion and Authorization Centre (IN-SPACe), which will become more effective as it gathers experience. The Narendra Modi administration has successfully roused business interest for India Inc. in space activities, a necessity for the supply-side strategy. The administration has singularly assisted the private players in graduating from mere space contractors to stakeholders in national space activities.
The hundred and counting space-tech startups, the hundreds of MSMEs and large industrial conglomerates are all waiting to reap profits from space activities. 2022 is a crucial year for the first batch of space-tech startups. They are preparing with their tech-demonstration missions to get higher rounds of investments and, more importantly, business. The government is also contemplating disinvesting from the DoS, especially the Mohali-based Semi-Conductor Laboratory. The SCL’s disinvestment will be monitored by its earlier parent, the Ministry of Electronics and Information Technology. It may be taken over by a private entity that can avail the benefits from the ₹76,000 crore PLI Scheme for Semiconductors. It is likely that even after the takeover, the SCL will continue to focus on semiconductors for space-based civilian, commercial and defence applications. There are not many other disinvestment opportunities from DoS. But the novel, high-end and expensive infrastructure present in DoS institutions will be increasingly available to private parties for their research, development, testing and evaluation (RDTE) after thorough vetting.
Creating new business opportunities for space companies and sustaining them is the next big task before the government. For instance, Europe, Canada, and Japan have been highly concerned about keeping their space startups at home. China and the U.S., massive equity capital magnets, will sway startups from worldwide, including India. In comparison, the Indian financing market is diminutive. India risks losing out on mature deep-tech startups that grow to require any amount above $20 million. The loss is massive: you lose out on talent, intellectual property, revenue and profits. Moreover, the ecosystem loses a critical cog in the form of the company. India will need to work carefully on this crucial aspect.
Indian investors have not only been short of capital, they are also risk-averse. This is why India is yet to see massive startup successes in deep tech, space tech being part of it. Glorious success is an outcome of calculated risks. The government must strategise to encourage ‘desi capital’ in deep-tech and provide the necessary safety nets.
One way of doing it is through allocating 25 per cent of the space research and development budget to the private sector. Of course, the suggestion takes cues from a similar financing policy announced for the Ministry of Defence in this year’s Union Budget. There is a rationale for it. In the February 2021 notification of the New Public Sector Enterprise (NPSE) Policy for Atmanirbhar Bharat, space has been accorded the status of a strategic sector along with aerospace and defence. The government, under this policy, has committed to minimising its presence in the NPSEs. Offering early-stage finances for space-tech R&D to the private sector will be vital for the ‘space economy’ that the finance minister mentioned. The private sector will only pick grants and engage in a project that has commercial value. Given their business acumen, the private sector will scale the R&D output according to the value it generates for them and the national economy.
DoS laboratories have not fared well compared to the Council for Scientific and Industrial Research (CSIR) or Indian Institutes of Technology (IITs) regarding the generation of intellectual property. This poor performance could restrict ISRO’s role merely as a service provider. Allocating a 25 per cent space-tech R&D budget to the private sector will allow ISRO to focus on niche, non-commercial and strategic projects of interest to the government.
Offering early-stage grants to the private sector can be the first step towards incentivizing—the touchstone of Sunrise Opportunities. Eventually, by the middle of this decade, the government will have to begin work on an array of Production-Linked Incentive Scheme for various commercially relevant space technologies, including imaging sensors, communications payloads, composite materials, among others. Incentives will also be vital for creating new employment opportunities in the private space ecosystem and, therefore, the supply-side strategy.
IN-SPACe is building a directory of superannuated scientists from DoS laboratories who can play mentoring roles for space-tech startups. Incentives and mentoring will be crucial to attracting middle and late-stage private funding and public financial instruments.
Space activities are formally considered a strategic sector and national space economy a sunrise opportunity. The Indian government must consider the economic security of space activities as its foremost priority. The government has successfully shown its interest in nurturing, and the private sector has responded favorably. As India marches towards its centennial independence year, the productivity of our space activities must entirely be in India’s service. The good thing about Amritkaal planning is we have broken the short-sighted five-year planning for good. The Sun over India’s space aspirations is rising.
(The author is a space scientist who works at the crossroads of space tech strategy, space diplomacy and Space 2.0. Views expressed in this article are personal)
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