Daily News Analysis

Space Economy

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Why in the News?

The Indian Union Budget for 2024-25 announced the establishment of a ₹1,000 crore venture capital fund aimed at boosting the space economy in India. This fund is intended to support space tech startups and small- to medium-sized enterprises (SMEs) throughout their lifecycle.

More on the News

  • Purpose: The venture capital fund will provide financial support to space tech startups and SMEs at various stages of development.
  • Complementary Initiatives: It will build on existing initiatives like the Seed Fund Scheme launched by the Indian National Space Promotion and Authorization Center (IN-SPACe) in 2023.

Need for Promoting Space Tech Start-ups and Private Sector

  • Reducing Import Dependency:
  • Current Situation: India imports space technology components that are 12 times more costly than the earnings from exports (2021-22). These include components like high-strength carbon fibers and space-qualified solar cells.
  • Goal: Reduce import costs by developing domestic space tech capabilities.
  • Freeing Up ISRO Resources:
  • Focus Shift: Encouraging space entrepreneurship will allow the Indian Space Research Organisation (ISRO) to concentrate on core R&D activities such as interplanetary exploration and strategic launches.
  • Shifting to a Demand-Driven Model:
  • Sector Integration: Space technology integration benefits almost every major sector, from urban development to disaster management, through satellite data.
  • Global Competitiveness:
  • Foreign Players: Companies like SpaceX and Blue Origin have revolutionized the global space industry with cost-effective solutions.
  • Indian Private Sector: Indian private firms have largely been vendors for government programs; thus, enabling end-to-end space activities will help them compete globally.
  • Socio-Economic Benefits:
  • Innovations: Space tech can address challenges in agriculture, disaster management, and communication.
  • Growth Projection: The Indian space sector is expected to grow at a ~48% CAGR over the next five years, reaching $50 billion.

Private Sector Participation in Space

  • Startups: Over 200 space-based startups are currently active in India.
  • Milestones:
  • Vikram-S: India's first privately built rocket, launched by Skyroot Aerospace.
  • NSIL and HAL Partnership: An MoU was signed for producing PSLVs.
  • Agnikul Cosmos: Test-launched a 3D-printed rocket engine.
  • OneWeb India: Received approval for satellite broadband services from IN-SPACe.

Challenges in Promoting Start-ups and Private Sector Participation

  • Regulation Issues:
  • Multiplicity of Regulations: Startups face a maze of approvals from multiple agencies (DoS, ISRO, Antrix Corporation).
  • Regulator vs. Operator: ISRO’s dual role as both regulator and operator creates conflicts of interest.
  • Risky Nature of Industry:
  • Market Uncertainty: Long incubation periods and lack of a guaranteed market make space ventures risky for investors.
  • Funding Constraints:
  • Investor Preferences: Indian investors often prefer safer investments over high-risk space tech ventures.
  • Cost Issues: Reliance on imported materials increases costs and delays.
  • Security and Strategic Concerns:
  • Risks: Increased private sector involvement raises concerns about foreign interference and security.
  • Other Challenges:
  • Talent Pool: Limited skilled workforce.
  • Space Debris: Growing space activities increase space debris.

India’s Initiatives to Promote Space-Tech Entrepreneurship

  • Key Organizations:
  • IN-SPACe: Regulates and promotes private space activities in India.
  • Antrix Corporation Limited (ACL): Handles commercial activities of ISRO.
  • New Space India Limited (NSIL): Manages ISRO's commercial endeavors.
  • Indian Space Association (ISpA): Industry body for private space sector development.
  • Key Initiatives:
  • Indian Space Policy 2023: Allows full participation of non-government entities in space activities.
  • FDI Policy: Allows up to 74% FDI in satellite manufacturing and 49% in launch vehicles and spaceports.
  • SpaceTech Innovation Network (SpIN): Encourages public-private collaboration for space startups.
  • Tax Benefits: Satellite launches are exempt from GST.
  • Atal Innovation Mission (AIM):
  • ATL Space Challenge: Encourages students to tackle space sector challenges.
  • AIC Scheme: Supports startups in UAVs, drones, space debris tracking, and more.
  • Mentoring: Access to retired ISRO experts for guidance.

Way Forward

  • Enact Space Activities Act:
  • Purpose: Provide legal clarity and impetus for the industry.
  • Mapping Value Chain:
  • Action: Identify challenges and trends, and facilitate government contracts for private startups.
  • Capacity Building:
  • Programs: Invest in academic and training programs for skills in systems engineering.
  • Building Synergy:
  • Partnerships: Foster collaborations between startups, ISRO, and international companies.
  • Other Measures:
  • Funding: Increase the Technology Development Fund Corpus and viability gap funding.

By implementing these measures, India aims to strengthen its space economy, enhance private sector participation, and position itself as a competitive player in the global space industry.

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