Currently, India boasts of over 100 spacetech startups, with 47 new startups established in 2021 alone.
New Delhi: With the space economy in India set to grow to USD13 billion by 2025 at a compounded annual growth rate of 6% supported by enabling government policies, breakthrough advances in technology, increasing role of private sector and start-ups and initiatives in developing its own rockets, India is at the cusp of a transformative change in the space programme. Currently, India boasts of over 100 spacetech startups and the year 2021 was a watershed year for spacetech startups, with investments reaching USD 68 million, a y-o-y increase of 196%. There were a total of 47 new spacetech startups established in India in 2021 alone, pushed by key drivers for investment in the Indian space segment as involvement of private players, lower costs for developing and launching satellites, promise of substantial return on investment and technological advancement in the space industry, states a report by Indian Space Association (ISpA) and Ernst & Young.
At the heart of this progress and developments is the historic decision of the Narendra Modi Government to open up the space sector to private participation. Till 2020, space was the exclusive preserve of the Indian Space Research Organisation with private players limited to role of suppliers and vendors. In June 2020 seeing that India had only 2.3% of the global space economy despite its prowess, the government decided to open up the sector to private companies. There is more to come, says Lt Gen (retired) Anil Kumar Bhatt, Director General of ISpA, with the much awaited space policy where discussions are taking place and matters have moved to the final stages of drafting. “The policy is expected to liberalise the entire space domain for the private players to participate in all activities spanning the upstream, midstream and downstream,” says Bhatt. “An important part of the policy is that ISRO facilities will be available for the private players,” says Bhatt.
The intent of the Government to power up India’s space capabilities is already manifested in allowing start-ups and private companies to explore various dimensions. “There is a company which will be making a 3D rocket engine and launch it anytime this year and another Azista Bst Aerospac which claims to have the capability of creating 30 satellites per year. Going ahead we expect Indian private companies launching satellites for India and foreign players with a cost that is competitive,” says Bhatt.
A key driver of India’s new orbits is usage of space for broadband and space-based communication as the primary mechanisms to narrow the digital divide in India as Bharti Group-backed OneWeb, Amazon’s Project Kuiper and Elon Musk’s Starlink stir up a race to provide satellite broadband services, with a special focus on remote areas where deploying mobile towers or fibre optic cables are difficult. It’s an idea whose time has come on the back of a chain of developments since the year 2000 when, as per Lt Gen A.K. Bhatt, Director General of Indian Space Association, the open sky policy began manifesting in the USA with Elon Musk and Virgin Galactic coming into the space arena–a largely strategic activity till then–and space became increasingly more important from the commercial point of view. This has, over the years, culminated into some very disruptive technology coming into play with the twin effects of low earth orbit becoming very active especially for satellite communication and significant reduction in the cost of launch, according to Bhatt, with some players managing it at almost one fifth of the cost.
These disruptions have unleashed a huge potential in usage of space for broadband to the remotest part of a country throughout the world and the implication for India is the prospect of satellite internet services helping to connect the rural and remotest parts of the country that are otherwise tough to reach through wiry cables or microwave signals coming from towers. The E&Y report cites India’s overall tele-density at 85.1 per cent at the end of July 2022, with rural tele-density just crossing the 58% mark. Satellite connectivity, in conjunction with a terrestrial communication network, can help to improve tele-density significantly. Bharti Group-backed OneWeb has set the ground in India where its services are expected to begin in mid-2023 and several companies are utilizing cutting-edge technologies to develop innovative launch solutions in India having built considerable expertise around the launch of low earth orbit, medium earth orbit and geosynchronous equatorial orbit satellites and orbit management solutions.
This kind of build-up, as Bhat points out, will be critical in bridging the existing digital divide in India and opening up multiple downstream usages like health, education Internet of Things etc. These satellite services can also be used for remote sensing by farmers for agricultural purposes and also by banking industry for issuance claims assessment and now there is a start-up which is looking into mines to find if it is alive and how much of the capacity is being used, courtesy this technology. In fact, the remote sensing segment may register one of the highest CAGR through 2025, driven by an increase in resolution of commercially available imagery and adoption of new-age technologies, says the E&Y report. Another trigger for India’s leap into the global space market will be satellite manufacturing which offers significant potential for growth, riding on the back of the ‘Make in India’ initiative and increasing demand for small satellites, according to Prashant Singhal, Emerging Markets TMT Leader, E&Y. The launch segment is fast becoming a key focus area for startups and small and medium businesses (SMEs) in India to drive the innovation agenda and to make use of new revenue opportunities. “By 2025, satellite manufacturing will be the second fastest growing segment in the Indian space economy, with launch services growing the fastest. Indian companies have developed considerable expertise around satellite launch solutions. This segment is fast becoming a hotbed of activity for startups and SMEs,” says Singhal in the report.
Besides, an increase in demand for military and Defence satellite communication solutions is likely to spur the market forward. From an end-user industry perspective, media and entertainment may account for 26 per cent of the total services market by 2025, followed by retail and enterprise at 21 per cent and Defence at 20 per cent.
There is however, more to be done. Development of spacetech parks will be crucial to build the manufacturing ecosystem and help to improve unit economics of satellite manufacturers by using shared resources and facilities. A conducive regulatory and policy framework will go a long way in building a robust ecosystem. Singhal suggests promoting ease of doing business is critical for investments to flow in the space domain. For instance, a single window approval process will significantly reduce time for decision making. The overall attractiveness of the sector needs to improve for greater private participation. For this to happen, a collaborative approach and inclusive engagement between the government, regulatory bodies, national and international organization, and other stakeholders is required.