Space Economy

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%).

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.

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. 

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)