Mains Practice Questions

Approach

• Define the space economy and explain how India’s Space Sector Reforms 2020 have enabled private participation.
• Discuss its significance for India, outline the role of ISRO, and examine the challenges along with the measures needed to be taken.
• Conclude suitably.

Introduction:

The global space industry is rapidly evolving with increasing commercialization and private sector involvement, giving rise to a dynamic new space economy. In line with this trend, India’s 2020 Space Sector Reforms enabled greater private sector participation, driving accelerated growth, fostering innovation, and strengthening strategic and economic capabilities.

Body

Significance of the New Space Economy for India:

• Economic Growth & Market Expansion: India’s space sector is projected to grow at a CAGR of approx 48% over the next five years, aiming to reach a market size of USD 50 billion.
  • The sector attracts growing private investment, with venture capital funds like MGF-Kavachh securing ₹2,500 crore in the last three years, fueling innovation and domestic manufacturing.
• Reducing Import Dependency: Currently, India’s import costs for space technology components (like electronics, carbon fibers, and solar cells) are twelve times its export earnings in the sector.
  • Promoting indigenous space startups and private players can reduce this dependency, boost domestic manufacturing, and build self-reliance.
• Shift to Demand-Driven Model: Unlike the traditional supply-driven model centered around government-led missions, private participation enables a demand-driven ecosystem where space technologies cater directly to commercial and societal needs, including satellite data usage for smart cities and precision agriculture.
• Global Competitiveness: International players like SpaceX and Blue Origin have revolutionized space access by drastically cutting costs and turnaround times.
  • With initiatives like the POEM program increasing startup payloads on PSLV launches (from 6 in 2022 to 24 in 2024), India is positioning itself as a global space economy player.
• Social and Strategic Benefits: Enhanced private sector participation leads to innovative solutions addressing pressing socio-economic challenges, such as enhancing connectivity in rural areas, disaster preparedness, and environmental monitoring.
  • It also allows the ISRO to focus on high-end strategic and interplanetary research.

Role of ISRO in the Evolving Ecosystem:

• Catalyst and Facilitator: ISRO, through the IN-SPACe, facilitates private sector access to infrastructure and regulatory support. This enables startups and SMEs to carry out end-to-end space activities independently.
• Regulator and Enabler: ISRO and the Department of Space (DoS) act as regulators ensuring safe and efficient use of space resources
  • While promoting non-governmental private entities (NGPEs) through clear policies like the Indian Space Policy 2023, which allows 74% FDI in satellite manufacturing and operations under Automatic route.
• Collaborator and Partner: ISRO partners with private companies for technology development and commercial production, exemplified by collaborations with NSIL, HAL, L&T, and startups like Skyroot Aerospace and Agnikul Cosmos, which have achieved significant milestones like launching India’s first private rocket.
• Capacity Building: ISRO supports private space growth through initiatives like the Atal Innovation Mission’s the ATL Space Challenge, space tech incubators, and mentorship by retired experts via IN-SPACe.
  • It also provides access to critical infrastructure like launch vehicles and ground stations.
• Focus on Core Research: By enabling private players to handle commercial launches and satellite production, ISRO can concentrate on advanced research in interplanetary missions, deep space exploration, and strategic launches, enhancing India’s space leadership.

Challenges in Promoting Startups and Private Participation:

• Regulatory Hurdles: Overlapping approvals and lack of an independent regulator; ISRO functions as both operator and regulator.
• High Risk & Uncertainty: Long gestation periods and uncertain markets deter private investment.
• Funding Issues: Indian investors prefer safer sectors like 5G over risky fields like space tech, limiting private funding.
  • ISRO’s modest budget, less than a quarter of schemes like PM-KISAN restricts its growth.
• Dependence on Imports: India often imports advanced space-related services and technologies while exporting or relying on low-skill, low-value goods, highlighting a gap in domestic high-value capabilities.
• Space debris & Security Concerns: Increased private activity heightens risks of foreign interference and strategic threats.
  • Increasing space debris poses significant threats to satellite safety and national security, as collisions can disable critical space assets.

Way Forward:

• Enact Space Activities Act: Enact a dedicated Space Activities Act to provide legal clarity and support industry growth.
• Value Chain Mapping: Analyze various segments to identify gaps, benchmark globally, and shape market-driven solutions.
• Government Support: Offer contracts to startups to stimulate demand and validate business models. Enhance funding mechanisms and reduce risk aversion among investors.
• Capacity Building: Strengthen academic and training programs, especially in systems engineering and space tech.
• Sector Synergy: Promote collaboration between startups, ISRO, and international players for expertise and market access.
• Additional Measures: Expand Technology Development Fund, introduce viability gap funding, and improve access to capital.

Conclusion:

The commercialization of space and private sector participation are pivotal to India’s emergence as a global space economy leader. ISRO’s evolving role as facilitator, regulator, and innovator is critical to nurturing a vibrant space ecosystem that delivers economic, social, and strategic benefits to the nation.