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Privatisation of Space Sector – UPSC


Privatisation of Space Sector: The Minister of State for the Department of Space shared with the Lok Sabha that the government is considering the possibility of allowing Foreign Direct Investment in the space sector.

Evolution of Space Sector:

Space Race 1.0:

  • In the 20th century, the thrilling space race kicked off when the Soviet Union sent Sputnik into orbit in 1957.
  • This cosmic competition mirrored the tense Cold War atmosphere and served as a real-world battleground for the clash of ideologies.

Space Race 2.0:

  • Now, in the 21st century, a new space era is unfolding. Instead of nations, private companies are leading the charge, propelling humanity forward.
  • The focus has shifted from political rivalry to making space accessible for everyone, opening doors to commercial opportunities that benefit us all.

Privatisation of the Space Sector in India?

  • India has become a major player in space exploration, covering everything from building satellites to creating powerful launch vehicles and even venturing into interplanetary missions. In the financial year 2021, the country saw a whopping $68 billion in early-stage investments in space technologies, securing its position as the fourth-highest globally.
  • The space sector in India is buzzing with over 350 startups, including notable names like AgniKul Cosmos and Skyroot Technologies. These startups have not only showcased indigenous technologies but have also established solid foundations with practical and sustainable business models.
  • Adding to the excitement, the Government of India (GOI) recently introduced a new organization called INSPACe (Indian National Space Promotion and Authorisation Centre) to complement ISRO. INSPACe acts as a one-stop hub, simplifying the process for commercializing Indian space activities. It aims to encourage private entities by providing a friendly regulatory environment and fostering collaboration with existing facilities, giving a boost to the overall growth of the space industry in the country.


Limited Indian Presence in the Growing Space Economy: Despite the space sector being a thriving $440 billion global industry, India struggles with a meager less-than-2% share.

Brain Drain Impact on Private Participation: India has witnessed an 85% increase in brain drain since 2005, leading to a decline in private involvement. The primary factors include a lack of investor confidence and reduced private engagement in the space domain.

Investor Confidence Challenges: Private space ventures in India encounter obstacles in attracting investors, making it challenging for them to operate feasibly. This hampers the growth of the sector within the country.

Lack of Transparent Legal Framework: The absence of a clear legal framework adds to the predicament, as it fails to provide transparency and clarity. This ambiguity hinders independent private participation in the space industry.

Unspecified Timelines: The intricate nature of space business demands well-defined timelines for licensing, authorization issuance, and continuous supervision mechanisms. The absence of such timelines complicates the operational aspects of private space ventures.

Insurance and Indemnification Challenges: Ambiguity in space laws regarding insurance and indemnification, especially in determining liability in case of mishaps, poses significant challenges. This lack of clarity creates obstacles for a smooth rollout of space activities.

Dependency on ISRO Licenses: Currently, private entities in the sector operate on leased licenses from ISRO rather than possessing their own intellectual property for a product. This dependence limits their autonomy and growth potential.

Way Forward

  • We should update our space laws, dividing them into specific sections that focus on different parts of the space industry. This aligns with the Outer Space Treaty.
  • Many advanced nations limit the financial liability for space activities. India can follow suit, which would encourage private investment in space ventures.
  • France has a good model with four obtainable licenses and case-by-case authorizations. India can adopt a similar approach to streamline the licensing process.
  • Similar to Australia, we can make it mandatory for space operators to have insurance coverage. This ensures financial protection and responsibility in case of unforeseen events.
  • Indian private space companies should create their own intellectual property for products or services. This independence allows them to compete globally and not be solely reliant on ISRO.
  • Private space companies should not limit their market to ISRO alone. By expanding globally, they can tap into a wider customer base, fostering independent growth.
  • Instead of merely relying on private companies for manufacturing support, ISRO should involve them in more complex operations. This collaboration can lead to cost reduction, faster innovation, and the adoption of advanced technologies.

Read Also: Right To Be Forgotten – UPSC

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