Space Economy in India: Size, Opportunities, Regulatory Framework, and Government Initiates

Context

According to a recent report from the World Economic Forum (WEF), the global space economy will reach a value of $1.8 trillion by 2035, nearly identical to the scale of the world semiconductor industry.

• The report titled ‘Space: The $1.8 Trillion Opportunity for Global Economic Growth’, is authored by the WEF and consulting firm McKinsey & Co.

Space: The $1.8 Trillion Opportunity for Global Economic Growth’ By WEF and McKinsey & Co.

• Ubiquity of Space Technologies: It concludes that the industry of space and access to it will become one of the biggest parts of the global economy, owing to the use of space- and satellite-enabled technologies widely. 
  • This primarily includes navigation and communication, which already has become widespread in nearly every industry. 
  • Further, Earth observation satellites and the data coming from them are expected to aid many industries.
• Emergence of Additional Industries and Companies: These have emerged due to satellite technologies, including telecommunications and ride-hailing applications, both of which rely on satellite technology.
• Impact on Other Industries: More than 60 percent of the increase in the space economy would come from other industries relying on space economy, such as food and beverage, state-sponsored defence and weaponry, consumer goods and lifestyle, and more.
• Mitigation of Global Challenges: Beyond revenue generation, technologies enabled by the space industry will play a crucial role in mitigating global challenges in a warming world.
  • Ex- Disaster warning systems, climate monitoring, Earth observation for resource tackling, and more.

What is the Space Economy?

• The Space Economy is defined by the OECD as the full range of activities and the use of resources that create value and benefits for human beings in the course of exploring, researching, understanding, managing, and utilizing space.
  • The term ‘space economy’ covers the goods and services produced in space for use in space.

Current Trends in the Space Economy

• Economic Growth in Space Sector:  The Space Report 2022 estimates that the space economy was worth $469 billion in 2021 – a 9% increase from a year earlier. 
• • Global space market is projected to reach $1 trillion by 2040.
• Rise in State-Backed Investment:  According to the Space Foundation report, there has been an increase in state-backed investment in space projects around the world. 
  • There was a 19% jump in overall government spending on military and civilian space programmes in 2021. 

Drivers of Space Economy

• Decrease in Launch Cost: Rapid and large drop in launch costs of satellites and rockets, which has fallen 10-fold over the past 20 years. 
• Price of Data and Connectivity: It is also expected to drop by at least 10 percent as demand increases by 60 percent by 2035.
• Commercial Innovations: Example, improvement in resolution of Earth-observation technology, which in turn drives down the price to access the said technologies.
• Diversification of Technologies: There is a rapid diversification of space-based technologies and activities such as space tourism.
• Cultural Awareness:  Cultural awareness and general enthusiasm for space in recent days is also a major driver of interest in space for future generations.
• Catalysts of Expansion: 
  • Various industries are both drivers and beneficiaries of growth and diversification by improving three key aspects of space technology: 
    • Harmonisation
    • Increasing ease of usability and accessibility, and 
    • Education and awareness of growing technology.
• New Space Entrepreneurship has emerged in India with many start-ups which seek value in exploring end-to-end services in the Business-to-Business and Business-to-Consumer segments using New Space. 

Space Economy in India

• Share in Global Space Economy: At current, the space sector in India accounts for around two percent of the global space economy.
  • India’s space economy has the potential to reach $44 billion by 2033 with about 8 per cent of the global share.
•  Size of the Indian Space Economy: It is estimated around 8.4 Billion USD. Of this, the downstream services market, primarily of communication and data applications, accounts for close to 80% of the total space economy, wherein the private sector is a major contributor. 
  • The upstream market i.e. satellite and launch operations, is primarily contributed by the Government, with the private sector in a vendor oriented role towards manufacturing and delivering subsystems/components.
• Compound Annual Growth Rate (CAGR): As per the various market surveys, the space economy has grown with an average CAGR of 8%.
• Rise in Number of Space Start-Ups: As per DPIIT Start-Up India Portal, the number of Space Start-Ups have increased from just 1 in 2014 to 189 in 2023.
  • The investment in Indian Space Start-Ups has increased to $ 124.7 Million in 2023.
• Increasing Role of Private Sector: Private companies are exploring satellite-based communication solutions, Satellite integration and testing facilities.
  • The local manufacturing of the satellite subsystems and Ground systems are being taken up by the private sector.
  • Ex- SpaceX, Virgin Galactic, Blue Origin and Arianespace offer launch services and space tourism.
• Rise in Satellite Launches: There is an increase in the number of launches accomplished by the ISRO.Out of the 424 foreign satellites launched by Isro since 1990s, 389 (more than 90%) were launched in the last nine years.
  • India earned $174 million from launching of foreign satellites.

Steps Taken to Boost Space Economy in India

• Indian Space Policy, 2023:  It enables end-to-end participation of Non-Governmental Entities (NGEs) in all domains of space activities.
  • FDI Norm under Automatic Route: The policy allows up to 100 percent investment under automatic route for the manufacturing of components, systems and subsystems for satellites, ground segments and user segments.
    • For manufacturing and operating an entire satellite, up to 74 percent investment will be allowed under the automatic route. 
  • FDI Norm under Government Approval Route: Anything beyond the limit will have to go through a government approval process. 
    • Under the current policy, any foreign investment in manufacturing and operating satellites is allowed only with government approval.
• ASAT Capability: On 27 March 2019, India tested an anti-satellite weapon during an operation code named ‘Mission Shakti’. 
  • The test put India on an equal footing to US, Russia and China, the countries with such capability in the world till date. 
• IndSpaceX: First table-top space warfare exercise – IndSpaceX, demonstrated integrated satellite communications and reconnaissance for enhanced intelligence and firepower.
• Defense Space Agency (DSA):  In 2019, India established the DSA and the Defense Space Research Organisation (DSRO).
  • The DSRO, resembling a U.S. fighter command, coordinates space assets across military branches. 
  • The DSA, a research organisation, integrates civilian space technology for military applications. 
• Chandrayaan-3: launch the Chandrayaan 3 spacecraft to achieve a soft landing of a robotic lander on the moon’s surface.
• Aditya L1 mission: The Indian Space Research Organisation (ISRO) launched Aditya L-1, its first space-based mission to study the Sun.
• Bharatiya Antariksha Station:  India plans to set up Bhartiya Antariksha Station’ (Indian space station) by 2035 and take the first Indian to the Moon by 2040.

Opportunities Offered by the Space Economy

• Advancing Scientific Knowledge: 

  • A space station enables India to conduct cutting-edge research in various fields—such as astronomy, biology, physics, medicine and engineering. 
    • It will provide a unique platform for studying the effects of microgravity and the space environment on various phenomena and processes. 
    • A space station will also facilitate the development and testing of new technologies and applications for space exploration and utilization.

• Enhancing the Nation’s Prestige: 

  • It will showcase India’s achievements and capabilities in space and demonstrate its commitment and leadership in advancing humanity’s frontiers. 
    • It will inspire and motivate the next generation of scientists, engineers and explorers. A space station will also foster a sense of national identity and pride among Indians.

• Promoting Global Cooperation & Peace: 

  • It will offer opportunities for collaboration and exchange with other countries and organizations in space.
    • This will thereby foster a spirit of cooperation and mutual understanding among the participants and contribute to the peaceful use of outer space. 
    • This will also support the global goals of sustainable development and social welfare.

• Space Mining: 

  • Asteroids are rich in precious resources crucial for industries. They offer an alternative with abundant reserves, avoiding environmental concerns tied to wildlife harm during extraction. 
    • Space mining is  driven by demand for critical metals essential in electronics, solar panels, wind power, and electric car components.  

Challenges in the Development of Space Economy

• Space Debris: 

  • According to NASA, there are more than 100 million pieces of space debris at a size of one millimetre or larger orbiting the Earth.
    • This debris can include non-functional spacecraft, abandoned equipment, and mission-related debris travelling at speeds up to 17,500 miles per hour (28,160 kilometres per hour).
    • Even a tiny piece of debris can damage a satellite or spacecraft.

• Lack of Regulatory Ecosystem for Startups: 

  • The space start-ups in India are yet to take off in the absence of regulatory clarity. 
    • Hence, they need an enabling ecosystem, a culture of accelerators, incubators, venture capitalists, and mentors that exist in cities like Bengaluru which is where most New Space start-ups have flourished. 
    • India has to transform these start-ups into full-fledged industries to accelerate India’s dominance in space. 

• Cyber Attacks: 

  • The draft National Cyber Security Strategy lacks a focus on space security, despite concerns raised by the Data Security Council of India about potential attacks on critical infrastructure, including space agencies. 

• Minimal Share in Global Economy: 

  • India’s share is estimated at just 2% of the global market.
    • Over a third of transponders used for Indian services are leased from foreign satellites and this proportion will rise as the demand grows.
      • Thus,  India needs to collaborate with partners to increase its share in the global space market.

• Unidentified Anomalous Phenomena (UAP): 

  • The Indo-Tibetan Border Police (ITBP), have consistently reported UAP sightings. India is lagging significantly behind other nations in addressing the UAP issue. 
    • UAPs denote flying objects linked to non-human (alien) intelligences. 

• Human Spaceflight Expertise: 

  • India lacks experience in human spaceflight, which is essential for building and operating a space station. 

• Hazards to Astronaut Health: 

  • The space environment can be lethal without the correct protection equipment and precautions. 
    • The greatest threats are a lack of oxygen and pressure in closed environments; expansion of the cerebral ventricles, altered gravity fields; radiation and the psychological effects of isolation and confinement.

Way Forward to Indian Space Economy

• Integrating space into the National Cyber Security Strategy: There is a need to integrate critical cybersecurity safeguards into India’s national space policy, aligning it with the National Cyber Security Strategy and National Security Strategy. 
  • India needs to implement a Purple Revolution, incorporating cybersecurity red and blue teaming exercises under the Ministry of Defence and Home Affairs to enhance offensive and defensive capabilities.
  • ISRO defends against more than 100 cyberattacks each day.
  • India needs to emulate the US and prepare satellite hacking sandboxes that can be experimented with to find system vulnerabilities.
• Increasing Indian Space Budget: The space budget allocation must be increased from 0.04 percent to at least 0.5 percent of GDP to boost research centres and space standards.
• Indian Space Resilience Agency: India must enhance space supply-chain resilience and security within QUAD’s space cooperation, establishing a central Indian space resilience agency for joint monitoring and incident response exercises.
• Permanent Body for UAP: India must establish a permanent body for UAP research under the Defence Ministry like the US and UK or under ISRO, on the French model.
  • India must introduce protocols for military and civilian reports while synchronizing the land, sea and space surveillance capabilities.
  • Given India’s ancient civilization, and the long history of UAP sightings, there is a possibility of UAP-related artifacts lying within its soil and waters. 
• Incentivising Startups: India must strategically incentivise startups for innovative space logistics solutions, aligning with the success of its satellite launch program. 
  • Like the US and Luxembourg, an easy regulatory and tax regime will greatly incentivise the growth of the space industry.
• Protection from Space Debris: Presently, India relies on data compiled by NASA to ascertain threats to its orbital assets. Thus, protection from space debris needs to track potentially threatening debris and change the course of the functional hardware. 
• • Future solutions can include more accurate tracking of debris and measures to lower their orbit for eventual burn out in the atmosphere.
  • Closer association with Inter Agency Space Debris Coordination Committee (IADC) and developing satellite bodies which can withstand minor impacts are some of the other steps which can be taken.
• Advancing Space Capabilities: This can be done by developing sophisticated space-based weaponry including hard kill guided missile systems, jamming devices, directed energy weapons, and electromagnetic pulse systems for space-to-space operations. 
  • Both soft and hard kill systems, such as jammers and directed energy weapons, are crucial components for Outer Space Warfare. 
• Creation of Space Force:  India may create a Space Force, mirroring the U.S., to strengthen satellite network defence and take assertive actions against adversary networks in the evolving space security landscape.
• Training Astronauts for Space Flights Program: India will have to train a team of astronauts and ensure their safety and well-being in space. 
  • India will also have to develop reliable launch vehicles and spacecraft that can transport crew and cargo to and from the space station.

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