India’s Space Economy

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• India’s space economy has evolved considerably and now accounts for about 0.23% of the GDP according to the CDS-IIST research project.

What Is the Space Economy?

• The global space industry includes the industry’s core activities in-space manufacturing and satellite operations.
• The main segments of the space economy include manufacturing, services from satellite operators and consumer services. 

About the recent Study by CDS-IIST

• The CDS-IIST research project: The study is done by Centre for Development Studies (CDS) and the Indian Institute of Space Science and Technology (IIST).
• The study is a first-time attempt at scientifically measuring the size of the space economy: we have arrived at a figure of approximately $5 billion for the 2020-21 fiscal.
• Sources: For the present study, the authors have relied on Indian Space Research Organisation (ISRO) and Parliament documents, the Comptroller and Auditor General’s (CAG) reports, data on intellectual property rights and other government data, in addition to Scopus-indexed space publications.
• The estimated size of India’s space economy as a percentage of the GDP: has slipped from 0.26% in 2011-12 to 0.19% in 2020-21, they found.
• Sector wise assessment: By employing internationally-accepted frameworks, the experts have examined the annual budget for the space programme and its constituents; space manufacturing, operations and application.
  • Space applications accounted for the major chunk of this evolving economy, constituting 73.57% of it in 2020-21, followed by space operations at 22.31% and manufacturing at 4.12%.

Issues associated with this sector

• A decline in the budget for space-related activities: leading to a reduction in the size of the economy in the last two years.
  • Space budget as a percentage of the GDP slipped from 0.09% in 2000-01 to 0.05% in 2011-12, and has remained more or less at that level since then.
• Constraints: ISRO has scientific, technological, infrastructure and budgetary constraints in launching significantly more satellites to meet civilian, commercial needs and military requirements. 
• Deficit: ISRO has deficit issues both in technical capacity and manpower placing constraints on its production strength.
• Foreign competition: Particularly for the launch of small satellites, which is an expanding market. The Elon Musk owned SpaceX Falcon 9 is widely considered a serious potential threat to ISRO’s workhorse the Polar Satellite Launch Vehicle (PSLV). 

Importance/ Significance of this sector

• In relation to GDP: India’s spending is more than that of China, Germany, Italy and Japan, but less than the U.S. and Russia.
• The CDS-IIST research project has coincided with the new Central government policies opening up the sector to private players.
  • The policy is very likely to enlarge the size of the sector through enhanced private investment and improved integration with the global private space industry.
•  47 Out Of 100 Space Startups In 2021: The economic survey released in 2022 showed how the number of startups in the space industry has almost doubled in the last year. Nearly 47 of the total 100 space startups in India were started in 2021, which is 21 up from 2020.
• The increasing instances of public-private partnerships contribute extensively to the outcomes because they contribute space-related outputs, space derived products and services and the scientific knowledge arising from space research.

Steps taken by the Government for Space sector

• The government recently updated the SpaceCom and SpaceRS policies, liberalizing the traditional satellite communication and remote sensing sectors.
• The government also released new rules for drones as well as guidelines for acquiring and producing geospatial data.
• Under various space tech initiatives: the interim independent nodal agency under the Department of Space-Indian National Space Promotion and Authorization Centre (IN-SPACe) has received close to 40 proposals from large industries, MSMEs (micro, small and medium enterprises), startups and academia.
  • The proposals cover a broad range of activities, cutting across both upstream (launch vehicle and satellite manufacturing) as well as downstream (earth observation applications, communications, etc.)
• The national registration mechanism for space objects has been implemented, with five satellites registered: A total of six memorandums of understanding have been signed with private or academic entities for sharing technical expertise and facilities.
• PM Gati Shakti National Master Plan: the government aims to provide multimodal connectivity to various economic zones and integrate the infrastructure linkages for movement of people, goods and services to improve logistics efficiency.
  • It will also leverage technology extensively, including spatial planning tools with ISRO imagery developed by Bhaskaracharya National Institute for Space Applications and Geoinformatics.

Way Ahead/ Suggestions 

• India is advantaged by its comparatively low operating costs.
• Removing regulatory blockages will pave the way for increased FDI into the sector.
• ISRO can pave the way for commercialization of small satellites by the private sector. 
• The space ecosystem should become more vibrant, economically viable and self-sustaining.

Source: TH