by C Raja Mohan

Indian Prime Minister Narendra Modi wants to privatize one of his country’s most zealously guarded governmental monopolies: the space sector. In a major speech at the inauguration of the Indian Space Association, a new industry grouping this week, Modi called for a new approach, where, he said, the private sector is free to innovate and the government becomes an enabler.

The announcement was a significant step in Modi’s efforts to pull private resources into India’s space sector, which has rapidly fallen behind global peers as space competition heats up in telecommunications, resource exploration, planetary expeditions, and defence. What’s more, Modi’s reorientation of India’s space policy is yet another indication of the profound shift in New Delhi’s geostrategic orientation.

Modi’s government has been exploring common ground on space security issues bilaterally with the United States and also plans to work with India’s partners in the Quadrilateral Security Dialogue—Australia, Japan, and the United States—to leverage their collective space capabilities. For now, these would include areas like monitoring climate change, managing disasters, and mapping precious natural resources from space. For the first time, New Delhi is also ready to work with Washington and its allies on setting new global norms to manage space, including rules for commercial competition and the use of space for defence.

Although India was among the first nations in the developing world to build an impressive space program, it has not kept up with changing global trends. One is the dramatic expansion of space commerce since the start of the 21st century. The other is the private sector’s growing role in space activities. On both fronts, New Delhi has been unprepared.

India now accounts for barely 2 percent of global space commerce, estimated to be worth around $440 billion today. The sector has been expanding at an explosive pace and is expected to reach more than $1 trillion in annual revenues by 2030, according to some estimates. New Delhi has set its sights on garnering at least 10 percent of this business by the end of this decade.

In the United States, SpaceX CEO Elon Musk’s company has broken the last of the government monopolies: the difficult business of launching manned rockets. Washington has been coddling SpaceX with lucrative contacts, hoping private companies’ growing role will help reinforce traditional U.S. primacy in space. The Chinese government, too, is finding ways to bring greater innovation to space projects by allowing more private activity and promoting competition between different space-sector entities.

India seemed hesitant to go down the private sector route—at least, until now.

India’s space program, like its nuclear energy program, began soon after the country’s independence and was driven by considerations of national prestige and economic and technological development imperatives. Since then, Indians have had to put up with much ridicule about their poor, under-resourced country shooting into space. But today, few can deny India’s space program’s considerable achievements, including in satellite construction and launching, telecommunications, and terrestrial observation from orbit for national development and defence.

If anything, international scepticism has reinforced India’s new techno-nationalism. The flag wrapped around the space program became even tighter beginning in the mid-1970s, when India faced growing international sanctions, including limits on technology transfers, as it was developing nuclear weapons. All along, any modest step in the space program was a cause for popular celebration.

Before sanctions hit, India enjoyed expansive cooperation in space technology with the West; subsequently, it partnered with the Soviet Union. India’s forced international isolation increased the domestic prestige of the space program and ensured a steady flow of state funding as well as considerable autonomy for its functionaries to set goals and define priorities. This combination of external pressure and uncritical domestic support meant there was little incentive for reform and regeneration. As a result, India found itself incapable of scaling up its activities amid the unfolding boom in space commerce.

The external situation began to change with the historic civilian nuclear initiative pushed by then-U.S. President George W. Bush beginning in 2005, which facilitated India’s reconciliation with the global non-proliferation order, brought an end to sanctions, and opened the door for international cooperation with India’s civilian nuclear and space programs. Domestic change, however, has been much slower.

India’s new space policy began to take shape in June 2020, when Modi announced the first steps to open up India’s space sector to private capital. The new policy mandated that space assets and technologies developed by the Indian Space Research Organisation and other government agencies be accessible to the private sector. New Delhi also announced the creation of the Indian National Space Promotion and Authorization Centre and appointed a former private sector executive to head it.

A new government company called NewSpace India will help reorient the Indian space program to a demand-driven model. Until now, India’s space activity was constrained by what government agencies chose and were able to develop. New Delhi now wants commercial demand for space services to drive the expansion of capabilities.

The government is now considering a variety of policy measures that will provide a new regulatory framework for space activity. The first two policy initiatives are expected to focus on space communication and remote sensing.

New Delhi’s cooperation with Washington may soon be reinforced by strong U.S. company participation in growing India’s space capabilities and commerce.

Although there is much enthusiasm within India’s space industry about Modi’s latest steps to liberalize the space sector, there are also deep concerns that his government will be too slow in translating political commitments into policy actions. Transitioning from a government monopoly to significant private sector participation will face many obstacles, including a cumbersome approval process, a lack of coordination among different government agencies, and continuing temptation to regulate rather than promote. That said, Modi has been bold in opening up the government’s science and technology programs, which had long been considered absolutely no-go areas for private companies.

Modi began his first term in 2014 with a vision of radically reforming India’s state-heavy economy, brandishing the slogan that government “has no business to be in business” and promising “minimum government and maximum governance.” But he found it hard to overcome entrenched political resistance in a country with a long history of economic populism and obstruction by India’s bureaucrats. He is beginning to have some success in the second term. Last week’s re-privatization of Air India 68 years after it was nationalized is a major landmark and likely to quicken the pace of public sector divestment.

India’s liberalized space sector at home has been coupled with greater engagement with India’s partners in the Quadrilateral Security Dialogue (known as the Quad) on space security, abandoning India’s traditional go-it-alone approach. Bilateral U.S.-Indian conversations on space security cooperation that began under the Trump administration now appear to be close to some concrete steps. When Modi and U.S. President Joe Biden met in Washington last month, the two sides agreed to finalize an agreement on space situational awareness by the end of this year. The agreement is about monitoring and exchanging information on the rapidly growing cloud of objects in near-Earth space, including satellites, disused objects known as “space junk,” and natural bodies. The objective is to keep space navigable as the world’s commercial and military stakes rise.

At the Quad meeting that took place on the same day as the Modi-Biden summit, the four leaders agreed to “consult on rules, norms, guidelines and principles for ensuring the sustainable use of outer space.” Cooperating closely with Washington and the Quad on space is a significant shift in India’s orientation as its traditional inclination has been to address space issues through the United Nations and from the perspective of the global south.

As outer space becomes a geopolitically contested arena, India’s cooperation with its Quad partners in setting new rules could emerge as an important turning point in India’s approach to the global commons. In the 1960s and 1970s, India actively shaped international negotiations on space. Inspiring internationalism drove India toward defining outer space as the “province of mankind.”

Today, however, India might be moving toward a more practical approach to emerging space issues—including regulation of activity on the moon and exploitation of space resources—while retaining the essence of internationalism that defines the current regime on outer space. That, in turn, will demand more intensive Indian cooperation with like-minded countries, not only in the Quad but beyond. In all likelihood, New Delhi’s political cooperation with Washington will soon be reinforced by strong U.S. company participation in growing India’s space capabilities and commerce.