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Space Economy

2024 FEB 27

Mains   > Economic Development   >   Indian Economy and issues   >   Miscellaneous

SYLLABUS

GS 3 >> Sectors of Economy >> Space Economy

REFERENCE NEWS

Space used to be the final frontier but its increasing exploration has changed that, replacing a romantic notion with narratives with financial, socio-economic, and geopolitical implications. (The Hindu)

SPACE ECONOMY-CURRENT STATUS

Researchers from the Centre for Development Studies (CDS) and the Indian Institute of Space Science and Technology (IIST), in a paper titled ‘The Space Economy of India: Its Size and Structure‘ highlight the current status of Indian space sector:

  • Space Economy is valued at INR 36,794 crore (approximately US$ 5 billion) for the 2020-21 fiscal. Further, the estimated size of India’s space economy, as a percentage of the GDP, has slipped from 0.26% in 2011-12 to 0.19% in 2020-21. 
  • According to the paper, space applications accounted for the major chunk of this evolving space economy, constituting 73.57% (INR 27,061 crore) in 2020-21. It was followed by space operations (INR 8,218.82 crore or 22.31%) and manufacturing (INR 1515.59 crore or 4.12%).

Space Economy in India UPSC

SIGNIFICANCE OF SPACE ECONOMY

  1. Economic Growth Catalyst: The integration of private ventures in comprehensive space activities could be a significant driver toward realizing the goal of a US$ 5 trillion economy by 2024. Moreover, forecasts suggest that the space economy could surge to over US$ 1 trillion by 2040, offering a substantial economic opportunity.
  2. Competitive Cost Advantage: India has demonstrated its capability to launch space missions at a fraction of the cost compared to Western counterparts, as evidenced by the cost-effective Mars Orbiter Mission. This cost efficiency positions India as a competitive player for international contracts.
  3. Anticipated Satellite Boom: With an estimated 10,000 satellites slated for deployment into low-earth orbit by 2026, and the market for small to miniature satellites expected to triple to US$ 42.8 billion, there exists a significant opportunity for India's small and medium-sized enterprises to carve out a niche in this burgeoning sector.
  4. Entrepreneurial Ecosystem: India boasts a robust private space sector with 368 firms, ranking fifth globally, ahead of China, France, and Spain. This vibrant entrepreneurial landscape is indicative of India's potential to become a leader in the private space industry.
  5. Expansion of Market Share: Despite its capabilities, India currently captures a mere 2% of the global space market, amounting to approximately US$ 7 billion. This modest contribution is attributed not just to technological and resource constraints, but also to restrictive policies. By revising these policies, India can utilise its untapped potential.

CHALLENGES IN THE DEVELOPMENT OF THE SPACE ECONOMY

  • Lack of Data: The CDS and IIST paper was a first-time attempt at scientifically measuring the size of the space economy. Further, even this was unable to establish the size of the space-based remote sensing industry.
  • Space Debris: Since the market is open, more corporations can send their vehicles and satellites up into space, which is already crowded. By some estimates, there are over 15,000 traceable and over 200,000 1-10 cm pieces.
  • Absence of a Legislative Framework: The draft Space Activities bill was introduced in 2017 but has been pending since then.
  • Brain Drain: India produces the best brains of the world but is unable to retain them. People emigrate from the country for better opportunities and careers that might hamper development of the space sector.
  • Lack of robust Dispute Settlement Mechanism: This discourages private investment in the space sector e.g., the cancellation of Antrix-Devas deal has impacted investor confidence and hurt India’s reputation as investment destination internationally.

STEPS TAKEN BY GOVT.

Indian Space Association (ISpA): It aspires to be the collective voice of the Indian Space industry. ISpA will be represented by leading domestic and global corporations that have advanced capabilities in space and satellite technologies.

Indian National Space Promotion and Authorisation Centre (IN-SPACe): It aims to provide a level-playing field for private companies to use the Indian space architecture. IN-SPACe will act as a channel between ISRO and any private players that want to participate in space activity, thereby culling lengthy bureaucratic procedures. It will benefit in two ways: (a) It will allow more research and scholarly work by individuals who have the capability. For example encouraging something similar to SpaceX in India; (b) It will allow ISRO to focus on more challenging missions and especially next-generation technology development.

Opening the Space Sector: The Government in June 2020 opened up the Space sector allowing the participation of the Indian private sector and foreign investment in the entire domain of space activities. This includes satellite creation, launches, and space-based services that were earlier not open to them.

Antrix Corporation: It is a government-owned company under the administrative control of the Department of Space. It was established in 1992 for commercially utilizing space products of ISRO, providing technical consultancy services and transferring technologies to industry.

New Space India Limited (NSIL): It is a Central Public Sector Enterprise under the Department of Space that was established in 2019. It has been mandated to transfer the technologies emanating out of the Indian space programme and enable Indian industry to scale up high-technology manufacturing base. 

 

WAY FORWARD

  • Broadening the Space Sector: Enforce existing policies to welcome private entities into the space industry, thereby expanding the market through increased private investments and integration with the global space economy.
  • Global Partnerships: Foster collaborations between Indian companies and major international space corporations such as SpaceX and Virgin Galactic to leverage their expertise and resources.
  • Investment Facilitation: Streamline approval processes for foreign investments, addressing delays exemplified by Hughes Communications' pending investment since 2017.
  • IN-SPACe's Role: Empower the Indian National Space Promotion and Authorization Centre (IN-SPACe) to fulfill its mandate by enabling foreign and domestic entities to navigate the regulatory landscape efficiently.
  • Public-Private Coordination: Develop a framework for collaboration between the government and private sector to regulate the number of space programs and initiatives for debris removal.
  • Passage of the Space Activities Bill: Finalize and enact the Space Activities Bill to provide clear guidelines and legal protection for private sector participants, ensuring their interests are safeguarded through stakeholder consultation.

The current scenario presents an ideal opportunity for India to unleash the potential of space economy. In this regard, right policy initiatives and support are desired to make the space economy reach its target of $40 billion by 2040. 

EXTRA POINTS

Private Participation in Indian Space Program:

  • Skyroot Aerospace: A Hyderabad-based startup that launched India’s first privately built rocket, Vikram S (Mission Prarambh), on December 11, 2021. 
  • Agnikul Cosmos: A Chennai-based startup is developing a small satellite launch vehicle called Agnibaan, which can carry up to 100 kg payload to low earth orbit. 
  • Pixxel: A Bengaluru-based startup is building a constellation of high-resolution earth observation satellites that can provide real-time insights for various applications, such as agriculture, forestry, urban planning, disaster management, etc. 
  • Bellatrix Aerospace: A Bengaluru-based startup that is developing innovative propulsion systems for satellites and launch vehicles, such as electric thrusters, green propellants, orbital transfer vehicles, etc. 

PRACTICE QUESTION

Q: The growing role of the private sector in space, demands India to move quickly towards a new model for India’s space activity. Explain with illustrations.(15M, 250W)