In today’s Finshots, we talk about Starlink’s plans to bring satellite internet to India and the challenges it’s facing.

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The Story

Imagine having super-fast, uninterrupted internet no matter where you are. Deep in the ocean, on remote islands, across deserts, on top of mountains, flying in aeroplanes, or even in places hit by disasters or wars. Basically, anywhere with a clear sky can get a satellite signal.

That’s Starlink for you—Elon Musk’s satellite internet service.

Now, Starlink wants to set up shop in India. But the Indian government isn’t rolling out the red carpet just yet. It has a laundry list of regulations that Starlink must follow before it can begin.

What are these must-follow rules?¹

First, the government is laser-focused on where Indian users' data is stored. If you use Starlink’s services, your data – like personal details, browsing habits, or streaming preferences – must stay within India’s borders. Simply put, it needs to be processed on servers within India and not sent to another country.

There’s another layer to this, too. Imagine you’re using Starlink’s internet while enjoying your cruise holiday in Indian waters. Your data gets sent to a satellite. If that data is processed through a gateway outside India, the government has no control over it. And that’s a big problem, especially when critical communications or sensitive information are involved.

So, the government has put its foot down and said that any internet traffic passing through Indian airspace or waters must also go through a local gateway.

And that’s not all.

The Department of Telecommunications has laid down another rule: Starlink can’t have investors or stakeholders from countries that share a land border with India—like China or Pakistan. Why? Because having investors from these countries could give them access to data or influence over company decisions. And since internet connectivity is linked to everything from defence systems to communication networks, that’s a risk India isn’t willing to take. Remember Huawei? The Chinese tech company was blocked from India’s 5G rollout because of its ties with the Chinese government. The same logic applies here.

And guess what? Musk’s Starlink has agreed to play by all of these rules!

So does that mean everything’s fine, and we could soon subscribe to Starlink internet plans in India?

Not really.

A Delhi-based think tank has raised another big concern: Starlink’s close ties with the U.S. government.² For instance, SpaceX, Starlink’s parent company, has a $1.8 billion contract with the National Reconnaissance Office to make spy satellites under the Starshield program. These satellites don’t just monitor and watch – they also help the U.S. military’s operational capabilities.

So, here’s the worry: could Starlink give U.S. agencies access to Indian users’ data without the Indian government even knowing? And given America’s history with surveillance programs like the Foreign Intelligence Surveillance Act (FISA), this isn’t just a wild fear; it’s a real concern.³

Take the example of Ukraine. Starlink provided free internet to the country after Russia invaded in 2022, but when Ukraine asked Musk to use Starlink to help in an attack on Russia’s fleet, he said no.⁴ This shows how a private company like Starlink can influence the military actions of countries. And this kind of power is worrying, especially if Starlink operates without local oversight.

And lastly there’s also a risk to local players. India has spent years building a robust satellite communication ecosystem through the Indian Space Research Organisation (ISRO), Antrix, and NewSpace India Limited (NSIL). If Starlink takes over the market, it could sideline local innovations and companies like Jio, Airtel, and BSNL.

The financial angle to all of this? Well, think of it like this: even if Starlink captures just 10% of the untapped market, it could make $34 billion a year in India at its current data price in the U.S.⁵ That’s a lot of money leaving India rather than helping local growth.

Countries like Taiwan are already being careful about this. Even though Taiwan relies on the U.S., it has refused to grant Starlink a licence. Why? Because of Musk’s business ties with China—he has the biggest Tesla factory there. Instead, Taiwan is spending $1.3 billion to build its own satellite network, which is completely controlled by its government.⁶

But here’s the thing: developing a satellite network isn’t easy.

Look, it’s not like Starlink was the first to offer satellite internet connectivity. Companies like Viasat, HughesNet, and Amazon have been doing it for years. But Starlink has a smart strategy in its arsenal.⁷ Instead of relying on a handful of large satellites, it uses thousands of smaller ones equipped with lasers to communicate with one another up in the sky itself. And this reduces its dependency on ground-based satellite stations.

This setup helps Starlink provide fast internet without the delay (or so-called latency) issues that traditional satellite providers often face.

How does it work, you ask?

Instead of using cables like regular broadband services, Starlink sends radio signals to satellites in low-Earth orbit (LEO). These satellites, which orbit between 200 and 2,000 kilometres above Earth, send the data to users on the ground. Since these satellites are closer to Earth, there is less delay in communication.

Today, over half of the LEO satellites in space belong to Starlink. This gives Starlink a massive head start over competitors. Of course, building this isn’t easy. It’s expensive, technically demanding, and it takes a lot of time. And Starlink is already miles ahead.

Of course, there’s a good side to all of this. If Starlink succeeds in India, we could have cheaper, high-speed internet across the country. That means better connectivity for people in remote areas, more opportunities for education, and even improved communication during disasters. But these benefits come with risks that we can't ignore—especially when it comes to something as crucial, sensitive, and intricate as the internet, right?

Nevertheless, does all of this also mean that we’ll see India invest heavily in low-Earth orbit satellites and other satellite internet infrastructure to improve its position in global communication? You tell us.

Until then…

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Story Sources: Outlook Business [1], Business Today [2], domain B [3] [5], Economic Times [4], The New York Times [6], Indian Express [7]

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