Space technologies has been undergoing a transformation world over, most recently in India. With newer scopes and opportunities galore emerging gradually, new business models have also been evolving.
According to the Organisation for Economic Cooperation and Development (OECD), space economy is defined as the full range of activities and the use of resources that create value and benefit human beings in the course of understanding and exploring space.
Indian space startups, especially in the recent years, are not shying away from exploring this space, thereby germinating opportunities for them. Indian companies, especially start-ups, are tapping into the realms ranging from building satellites to facilitating satellite-based services. The services include offering technology solutions, tapping into space data to create large data analytics products for different sectors like agriculture, social infrastructure, energy, banking, financial services, telecommunications, and beyond.
As many as 47 new start-ups entered the Indian space sector in 2021 alone, taking the tally to 101, according to the 2022 Economic Survey Report.
India accounted for approximately 2.6 per cent of the global space economy, valued at USD 9.6 billion, as of 2020. This was 0.5 of the gross domestic product (GDP) in India. Most importantly, the journey seems to have set off well. By boosting private participation in the commercial space sector, India hopes to substantially increase its space economy to USD 50 billion or 10 per cent of the global pie by 2030.
India’s space programme, since its inception, has been funded by the government. Soon after ISRO (Indian Space Research Organisation) was founded in 1969, the organization has developed a network of more than 400 vendors. They have developed specialisations in manufacturing, technology development, and supply of components. Some of the vendors include prominent names such as Larsen & Toubro, Hindustan Aeronautics Ltd (HAL), Alpha Design Technologies, Godrej & Boyce, and Centum Electronics.
Supply to Demand-based Model
The recent push for start-ups in the space sector is part of the vision to expand private sector participation in the areas of niche and specialized technology. The aim has also been to enable the growth of companies, especially start-ups, that are capable of developing end-to-end solutions.
Around 2020, some of the most important developments happened in the area of space economy when the government announced the opening of the commercial space sector to non-government private entities (NGPEs). This also marked the shift from a supply-based model to a demand-based model.
This was soon followed by the creation of the Indian National Space Promotion and Authorisation Centre (IN-SPACe), the single window nodal agency for authorising, promoting and regulating private players. Soon after, draft policies on remote sensing and satellite communications were also released.
Advantage for Indian Space Startups
Indian space startups have the advantage of offering cost-effective solutions, that too in relatively record time. For example, Agnikul incorporates technologies, such as 3D printing, to build small precision rockets within a week. Indian ventures possess another advantage as they can easily tap into the large affordable talent pool of aerospace engineers available in the country. India, with its five-decade-old history in the areas, has built a solid reputation in space technologies and has a strong, enviable suppliers network system.
The Indian space programme is uniquely boosted by the realisation of indigenous technology, facilities, systems and rollout of services in a systematic manner. In the recent past, satellite broadcasting services have benefited a large part of the population, and served as the media and entertainment industry.
In a nutshell, India probably has an ideal and evolved ecosystem in space technologies, having expertise and experience in all the segments.
Recently, Elżbieta Ewa Bieńkowska, the EU Commissioner for Internal Market, Industry, Entrepreneurship and SMEs had said that the European startups in the space sector producing satellites for economic purposes of agriculture and ecology used Indian launchers because India had a lot of smaller launchers which were very competitive in price.
The EU has even shown keen interest to work with Indian startups in this “booming” sector and to set up joint platforms both offline and online and engage in coaching, training and staff exchanges to help foster the startup ecosystem.
Sustaining the Start-up Momentum
Start-ups, among other things, need investments to sustain their business innovations. In a technology-intensive area such as space exploration, this becomes inevitable. In the year 2021, funding saw a whopping 200 per cent growth in year-on-year comparison, more will be needed. A total of USD 67.2 million was raised across 11 rounds, up from USD 22.5 million in 2020 across nine rounds, according to data from Tracxn.
Industry watchers feel that a lot more investment from both domestic and foreign investors will start increasing in tandem with the growth in the number of successfully tested products: More success stories should definitely make that happen. Although the country has a handful of success stories to showcase, the momentum should be encouraging. Soon, several more companies should be able to claim demonstrable successes. This will augur well for inflow of a significant amount of investment too.
Up the Road
The ISRO envisions to make available its knowledge and facilities for use by start-ups. Secondly, as space is a regulated environment, a proper system has been developed through the establishment of IN-SPACe, the regulatory body under the Department of Space (DOS). A synchronized framework is in the making to make functioning and growth of Indian space start-ups more conducive.
Global space economy is projected to become a trillion-dollar industry by 2040.
By 2025, launch services will be the fastest growing segment in the Indian space economy, followed by satellite manufacturing, ground segment and satellite services. The launch services segment will have a compound annual growth rate (CAGR) of 13 per cent by 2025, while the satellite manufacturing segment will have a CAGR of 8.1 per cent.
Satellite manufacturing is estimated to have a market value of USD 3.2 billion by 2025, with ground segment commanding a market value of USD 4 billion, launch services a market value of USD 1,047 million, and satellite services cornering a market value of USD 4.6 billion.
The opening up of the space economy to private participation ensures an era of growth and innovation in the space sector. By taking advantage of the latest technology, improving access to capital and technology, and promoting independent launch solutions of Indian private companies for satellites and spacecraft the Indian space economy can be boosted.
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.
Key Boosters for Investment
The government’s push for inclusion of private players in the space segment is based on the principles of (a) Lower costs for developing and launching satellites (b) Promise of substantial Return on Investment (RoI) (c) Increased market demand for geospatial data (d) Technological advancement in the space industry
Going further ideally, a single window approval process through a nodal body focused on space economy shall facilitate and ease the process of having in place requisite authorizations to ensure ease of doing business.
Introduce of a Production Linked Incentive (PLI) scheme in the area of satellite manufacturing, like mobile handsets and telecom equipment would work as a booster.
Dedicated facilitation efforts to access cost effective and early stage capital for startups can also be a game-changer.
A holistic skills development programme covering competency of systems engineering, training on how to operate satellites skillfully, and technology associated with special alloy for launch vehicles in all likelihood should encourage Indian space start-ups to aim for the sky.