by Rajeswari Pillai Rajagopalan

India’s finance minister Nirmala Sitharaman announced last week that India’s private sector will play a key role in augmenting India’s space programme, and that the government intends to share the facilities of the Indian Space Research Organisation (ISRO) with the private sector. This announcement was part of the Narendra Modi government’s call for new and bold reforms in an effort to promote its ‘self-reliant India’ mission. It is the fourth segment of the Rs 20 lakh crore Aatma Nirbhar Bharat Abhiyan special economic stimulus.

Sitharaman’s announcement entails a role for the private sector, possibly with the goal of greater investments in technology development and acquisition, capacity-building and space exploration, including planetary exploration. The minister, while announcing these reforms, appeared to understand that the private sector can help augment India’s space capability. While praising the work done by ISRO, she also pointed out that the private sector is also doing a lot of work in developing space technology. She also acknowledged that the existing regulations prevent private entities from using or even testing their products.

Therefore, to level the playing field, the government “will make a provision for the private sector to benefit from the assets which are available to ISRO and for India (in general) to benefit from.” The minister also said the new reforms would allow the private sector to play an active role in “satellites, launches and space-based services”.

But as always, implementation is key. Properly executing these reforms will require enabling policies and appropriate regulatory frameworks.

That the new reforms will allow private sector players to use ISRO facilities is a big deal. This indeed must be music to the ears of commercial players who have been seeking to get a fair share of the pie in terms of manufacturing of satellites and propellant technologies, among other areas. It should not be too difficult for India’s private space sector because there is a sizeable talent pool available outside ISRO. More importantly, the entry of the private sector, as in the telecom sector, can bring several advantages in terms of cost and access.

Following the announcement, ISRO tweeted that it will follow the government’s guidelines to allow the private sector to undertake space activities in the country. Though this did not seem particularly welcoming of the government’s initiative, ISRO’s support is critical to making it a success.

ISRO has in the last few years been opening up to the Indian private space sector in a gradual manner – mostly as a matter of compulsion because ISRO simply does not have the in-house capacity to address India’s growing requirements. Today, the Indian space programme is not just about civilian applications for remote-sensing, meteorology and communication, as in the early decades. India’s space sector and its requirements have grown enormously in the last decade to include television and broadband services, space science and exploration, space-based navigation and, of course, defence and security applications.

Among others, Ambassador Rakesh Sood has articulated the need for legislation to facilitate ISRO’s partnership with industries and entrepreneurs. Narayan Prasad and Prateep Basu, two prominent faces in the Indian space start-up segment, have argued that despite ISRO’s successes, “India’s space competitiveness has suffered from the absence of a globally reputed, private space industry.”

The private sector, especially the NewSpace industry and start-ups, have an advantage in terms of low-cost operations, which itself should be a big incentive for the government to make it an active stakeholder. A certain amount of democratisation of space technology with the participation of the private sector can ensure costs are kept low. And expanding the number of stakeholders will also ensure more transparency and better accountability and regulatory practices. This has been missing in India’s space sector. The same agency has undertaken promotion, commercialisation and regulatory functions – which is not healthy.

Following the minister’s announcement, I spoke to a few key players in the private sector to capture their sense of the reforms in the pipeline. Sadly, the general mood is not one of excitement but rather to wait and watch. To them, as stated earlier, the key is implementation. One of them, who did not wish to be named, argued that unless there is a conducive structure for the private sector to engage with, the announcement is more lip service. Narayan Prasad said that there need to be basic changes for the reforms to be effective. The private sector is particularly concerned about issues such as sharing intellectual property for products developed by the private sector. Prasad argued that IP-centric policy making has to be taken for real reform.

Right now, ISRO thinks they will use the suppliers only as manufacturing or services partners. So all IP is controlled by ISRO and suppliers just replace ISRO technicians and production facilities. This means most suppliers have no real IP of their own, and just depend on cost plus contracts from ISRO for business. The only way to change that is to create reforms where local industry can invest in building their own IP and/or products that can match global standards.

This in turn means that policymakers will need to view industry as more than sweatshops and look at what steps can be taken for IP/product development by private industry. This is the only way to integrate India’s private sector into the global supply chain. Prasad adds that if the ISRO is serious about partnering with the private sector, it must spell out the requirements and select the best available. Several private-sector actors have articulated the need for an independent regulator.

This is an area that has been a common thread in many of my conversations with Indian entrepreneurs. Rohan M. Ganapathy, CEO and CTO of Bellatrix Aerospace in Bengaluru, also made a strong case for an autonomous regulator, and acknowledged a need for the government to clarify R&D risk funding, which is crucial to realise new technologies.

It is not that the ISRO has not engaged the private sector. The ISRO has had long association with private firms such as Larsen & Toubro, Godrej and Walchand Nagar Industries. It is just that the mode of participation envisaged through the new reforms is very different. The current mode of work, more of an outsourcing model, is becoming inadequate. In the last few years, because of significant capacity deficit, ISRO began to work with a few in the private sector such as the Bengaluru-based Alpha Design Technologies, contracted to build satellites. Similarly, Bellatrix Aerospace began to work with ISRO on advanced in-space propulsion systems. But these remain exceptions.

But ISRO does recognise the new compulsions and has been trying to change. The newly formed commercial enterprise called the NewSpace India Limited (NSIL), under the Department of Space, is an initiative to engage the private sector. NSIL is meant to help the private sector with transfer of some technologies to the private sector, especially the small satellite launch vehicle that is being developed and even the older PSLV. But the pace of ISRO’s engagement with the private sector needs to quicken.

Followed up effectively, the new government initiatives could help. Indeed, ISRO needs to expand its operations significantly if it has to remain competitive, both from a domestic and international outlook. The Indian space programme has several advantages, the most important being cost: the ability to provide reliable launches in a cost-effective manner is a big advantage. The Polar Satellite Launch Vehicle remains a tried and tested launch vehicle and has managed to remain the cheapest for launching small satellites into space. But competition in this sector is picking up.

Jeff Bezos’ Blue Origin, Elon Musk’s SpaceX and start-ups from China want a share of the global commercial market, estimated to be worth around $350 billion (Rs 26.46 lakh crore). If ISRO does not improve its launch infrastructure and increase the number of launches, it will be at a disadvantage. And despite India’s cost advantages, it has a mere 2% share of this, worth $7 billion. India can gain significantly if ISRO and the country’s private space sector can cooperate effectively and synergistically. This requires the government to actually act on the initiatives it announced.