July 21, 2019The Intersectiontechnologyeconomics

Some space for the private sector in the race for space

Space policy should aim to grow the industry and create the resilience that space security requires

Mint This is from The Intersection column that appears every other Monday in Mint.

In an earlier column on what India needs to do to become a proper space power, I argued that we must ramp up both our capacity to use space and our capacity to deny our adversaries the reliable use of space. Other spacefaring nations are investing good money in both these, with the bulk of the investment going into enhancing their capacity to use space. What is striking about their approach compared to ours is the involvement of the private sector in the commercial use of space.

Indeed, it is ironic that India—whose space-faring tradition is decidedly in the service of human development—is lagging in harnessing the power of private innovation in the space domain. This not only limits the exploitation of space for economic development, but has serious national security implications.

The most basic way to secure our space capabilities is to distribute them across many different satellites and spacecraft, so that business continuity is unaffected even if an adversary manages to disable one or more of our satellites. The more critical the function, the more the diversity required. The US is highly vulnerable in space because it depends on thousands of its satellites. But it is also best equipped to deal with a potential attack on its space assets because it can find alternatives to switch to. Furthermore, with private US firms set to put thousands of satellites into orbit in the next few years, its security in space will improve. Similarly, China is significantly increasing the number of its active space assets through massive public investment as well as opening its skies to private entrepreneurs.

In this new space economy, India is playing with one hand tied firmly behind its back. While the Indian Space Research Organization (ISRO) is continuing on a successful path, there is no one at the private-sector end of the business. So, we must deregulate the space sector and create an environment for private industry to serve India’s commercial and strategic needs, and perhaps become a global space technology hub.

In November 2017, the government placed a draft Space Activities Bill for public consultation, but the legislative process has since not moved forward. With tiny Luxembourg seizing opportunities to become a big space economy player, and private space companies in nominally-Communist China having attracted more than half a billion dollars in investment since 2016, the race to be a leading space economy is well on its way. Once money, talent, innovation and infrastructure make their home elsewhere, India will struggle to compete. The Modi government must accord space policy greater importance, and Parliament must expedite the enabling legislation.

As Narayan Prasad, a leading satellite maven, points out, the official mindset still sees the private sector as a dependent part of the ISRO ecosystem. While this might have been the case as recently as a few years ago, the new space economy consists of independent private players across the value chain, from launch vehicles to satellite payloads. Without a proper governance framework, they lack a firm basis to operate in India and thus find it hard to attract private investment. The most important objective of the new space bill ought to be to clear the decks for the private sector.

India’s new space policy must also incorporate our learning from the successful deregulation of telecom, insurance and civil aviation. In each of these sectors, the government created an independent regulator to govern the industry, including the incumbent. This has worked well for India, as private telecom players, insurers, and—inopportune as it may be to say it now—even airlines have grown on the back of private investment.

The space sector should adopt the same model, with the department of space creating an independent regulator to govern ISRO and its affiliates as well as new private sector firms. Separate licences can be awarded for different classes of launch vehicles, orbits and services.

At the same time, the government must raise ISROs budget and encourage it to take up missions that push the technological frontiers.

Space policy should aim to grow the industry and create the resilience that space security requires. This means not constraining the number of licences or seeing licence fees as a revenue extraction opportunity. The purpose of regulation must be to ensure compliance with India’s international obligations, ensuring safety, covering liabilities and perhaps some standardization. The self-inflicted nuclear power legislation warns us against making liability conditions into a millstone so heavy that nothing ever takes off.

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Back in the 15th century, the Chinese built bigger ocean-going ships than anything Europeans could manage. Under Zheng He, they sailed up to Africa. Chinese seafaring remained a fully state-owned enterprise, an imperial monopoly. The Dutch and the English, on the other hand, started off with smaller, inferior ships, yet managed to land in America, Africa, India and Indonesia. Their private joint-stock companies subsequently established global empires. It was the difference in policy environments for seafaring that contributed to the relative fates of early-modern China and England. Beijing has learned that lesson. It is dangerous for India to ignore it.

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