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What Will It Take to Unleash NewSpace in India?

So far, India’s NewSapace sector has languished in ISRO’s shadow. Now, though, that could all be changing.

India captured the world’s attention last February, when its national space agency, the Indian Space Research Organization (ISRO), broke a record for launching the most payloads in a single mission at 104. The feat was a testament to how far India has progressed its space program in recent years, proving itself to be as consistent and reliable (if not more so) as countries like Russia or the United States, which pioneered spaceflight all those decades ago.

And yet, unlike the U.S., where the domestic commercial space industry has blossomed, India’s private space companies have been relegated to the outskirts. There is no Indian equivalent of SpaceX, or Boeing, or any of the other companies that have become mainstays in the global space economy. Instead, India has just a smattering of small and medium-sized enterprises, which have languished in ISRO’s shadow for years. Now, though, that could all be changing.

ISRO’s Lofty Ambitions

Last November, ISRO went public with its plans to launch 60 satellites over the next five years. On its own, ISRO could likely never achieve such lofty ambitions; it simply doesn’t have the manpower or resources. The volume alone is extraordinary. These are not smallsats — these are full-sized, one-ton Geosynchronous Earth Orbit (GEO) spacecraft, and they will require a significant amount of time, expertise and investment to manufacture and launch, particularly because ISRO’s Polar Satellite Launch Vehicle (PSLV) is expended after each mission.

So to achieve this rapid cadence of development, ISRO Chairman A.S. Kiran Kumar has invited private Indian companies to bid to manufacture up to half of ISRO’s requirements — at least 30 satellites. By February 2018, ISRO will select four or five companies to build the spacecraft and intends to launch the first handful by next year. ISRO has also coalesced a consortium of private firms to help assemble new PSLVs, the first of which is scheduled to launch in 2020.

According to Narayan Prasad, who heads the NewSpace India think tank, this is a huge step change from how ISRO has operated in years past. For the last three decades, he says, the way the organization interfaced with private firms was fairly one-dimensional: ISRO engineers would develop a new Intellectual Property (IP), then share that knowledge with companies and teach them how to test for quality and reliability. Once the company made the capital investment to produce the IP on their own, ISRO would then buy back the product or service for their own use. This is how the majority of component suppliers in India were born between the 1970s and now, Prasad says.

But the relationship between government and commercial space began and ended there. For the most part, ISRO has avoided relying on private space companies because it is incredibly (and arguably, overly) cautious about risk. “The government wants to remain as low risk as possible. It does not want to lose any satellites or rockets in the process. This is one of the reasons this is such a step-by-step mechanism. The risk aversion is extremely high because they don’t want to lose face in the public,” Prasad says.

Even now, ISRO’s requests are somewhat limited: “ISRO has started outsourcing the entire satellite assembly, but the problem is this is only the assembly. It is not the conceptual design of a mission, it’s not … the architecture of the whole satellite bus and so on. It’s essentially taking subsystems from different vendors and already established IPs from ISRO and putting them all together in your own facility without knowing what is inside each of those boxes,” Prasad says.

This dearth of support from the government has left India as one of the few advanced space-faring regions without a strong NewSpace industry. “The industry in any country will only grow so far as the government wants it to,” Prasad says. “In India, there has been no will at the moment for a SpaceX to emerge.”

Why NewSpace Has Lagged in India

There are so few burgeoning space startups in India, in fact, that you could probably count them on one hand. There’s SatSure, a company that uses agricultural data to improve the insurance market, and Bellatrix Aerospace, which is developing orbital launch vehicles and electric propulsion systems for satellites. India also had a group (Team Indus) participating in the Google Lunar X Prize race to land a rover on the Moon — but they’ve recently dropped out because they were unable to raise enough funds to keep their launch contract with ISRO.

Team Indus’ fate gets right to the heart of the issue, it seems, which is that young space enterprises in India exist in a vacuum of capital. Entrepreneurs in the United States and Europe can easily pitch their ideas to multiple private firms; in 2017 alone, venture capitalists pumped more than $2 billion into the global space industry, reports investment firm Space Angel. But none of those funds went directly to NewSpace companies in India.

“Most of them have raised money through high net worth individuals and so on, but you’re not seeing a Bessemer Ventures partner or someone like that who has invested in a NewSpace company in India today,” Prasad says. “Unlike in the U.S. or other markets, although the Indian space ecosystem is more or less mature, you don’t see the maturity in capital availability.”

The same could be said about support from the Indian government. In the United States, the Small Business Innovation Research (SBIR) program has proved a critical conduit of capital injection for some of the biggest next-generation space companies today, including Kymeta and Vector Space Systems. The European Space Agency’s (ESA) nearly two dozen business incubation centers function similarly, providing startups the financial and educational support they need to grow.

India, on the other hand, has yet to evolve beyond the IP buy-back scheme ISRO has relied on since the 1970s. This places entrepreneurs in a precarious position: if they’re really intent on kicking off a new space company, they’re more or less on their own. “I think most people who work in India in space, at least in the private sector, must be out of their minds or extremely passionate,” Prasad jokes.

In order for its NewSpace community to really take off, he says, the country needs major institutional changes and new frameworks that can nurture space startups into successful businesses. But he’s optimistic that Antrix, ISRO’s commercial arm, can use its large revenue stream to kick off a startup incubation program in the next two or three years.

Opportunities Lying in Wait

The tragic irony of it all is that India has huge addressable markets in which a savvy satellite company could thrive. Much like other rural geographies, internet penetration in the country is relatively low at just over a quarter of the population. Satellite, which is ideal for regions where building out terrestrial infrastructure is prohibitively expensive, could help bring the rest of the Indian population online. “If you provide today $10 internet to these rural portions, you have a market of 700 million people you can address. There are a lot of these kinds of bottom-up perspectives, which really shows you how big the potential is for the market, but it’s going untapped,” Prasad says.

In the same vein, simply due to its massive population India is one of the busiest travel markets in the world. According to the CAPA Center of Aviation, the country’s Civil Aviation Ministry intends to maintain 500 operational airports by 2020. The steadily increasing stream of commercial aircraft passengers could be a juicy target for operators that can offer In-Flight Connectivity (IFC) services via satellite. Unfortunately, nobody has captured India as a credible downstream market just yet, says Prasad, which would attract foreign investment.

Part of the problem is that there seems to be little awareness about the market opportunities within the country. Few analysts have done deep dives on the topic, akin to the Satellite Industry Association’s (SIA) comprehensive industry report on the United States and broader global market. This leaves a lot of important questions unanswered: “What is the size of the Indian market? Historically, how big has it been? What are its requirements? Where are the gaps? What is the ground equipment market doing? Nobody has actually done any exercise on this,” Prasad says. “Traditionally people have just been interested in larger markets like the U.S. This is one of the reasons why NewSpace in India has flattened out.”

Moving Ahead

India has a reputation for its strong aerospace and IT community, which could act as a launching pad for NewSpace ambitions down the line. And Bangalore — “the Silicon Valley of the East,” as it is sometimes called — could become a thriving hub for space startups due to its low cost of living and well-regarded tech institutes. Still, what India needs most is a proper foundation from the government to support commercial NewSpace endeavors, Prasad says. “With no particular, dedicated, independent space commerce assessment body for space-related activities or a dedicated road map within ISRO for commercial space in India, there is a need to establish an Office of Space Commerce that is independent of ISRO,” he adds. VS