In today's newsletter, we talk about the government's plan to entice private players to participate in space exploration.


The Story

Getting to orbit is hard and the economics of space exploration can be unforgiving. Think — “the rocket equation”. This equation specifies all your constraints: gravity is this much, fuel weighs a minimum of that much, and you need to take quite a lot of it almost up to low Earth orbit, and that leaves you able to carry only a tiny sliver of cargo.

Meaning, despite spending millions of dollars in getting the rocket up to space, there’s only so much you can carry. And if you are a private company you won’t have taxpayers to bail you out in case the mission goes awry. So space exploration is “risky business” no matter how you look at it.

But there’s still money to be made. Consider SpaceX. They’ve been able to build a reasonably successful business by building rockets, ferrying cargo (for NASA), and launching satellites for private players like Orbcomm, SES, and Iridium. They are even planning to offer cheap reliable internet by leveraging a constellation of about 1500 satellites scattered across the earth’s exosphere. Forbes estimates that SpaceX is probably making revenues to the tune of ~$2.7 Bn already (2019 estimates). And if they pull off that mission to Mars, who knows what else they could do.

But Indian companies can’t possibly aspire to replicate the success at SpaceX because they have a resource problem. Right now, private players can’t access ISRO’s playground. Yes, they do interact with India’s space agency. But these interactions are limited. For instance, ISRO has tie-ups with around 150 private companies, including the likes of Larsen & Toubro, Godrej, and Walchand Nagar Industries, and these entities manufacture close to 75–80% of components for ISRO’s launch vehicles.

But ISRO takes full ownership afterwards. And the likes of L&T and Godrej only act as subcontractors, vendors, or component suppliers. Nothing more. They can’t launch their own rockets. They can’t use ISRO’s testing facilities and there’s no way they’ll be allowed to explore the space on their own accord. This has perhaps been the biggest bottleneck to entice private players into the ecosystem.

But last month, finance minister Nirmala Sitharaman vowed to fix this. It was perhaps the first admission that existing regulations impeded the private sector from fully participating in space exploration. And just a few days back, the Union cabinet finally approved the formation of a new organization- the Indian National Space Promotion and Authorisation Centre (IN-SPACe) under the Department of Space (DoS). IN-SPACe will now be in charge of regulating, guiding and promoting the activities of the private sector in the space industry. More importantly, through INSPACe, private companies will be allowed to build their own facilities on DoS premises after they vet their application.

And this is a big positive. Here's ISRO chairman, Dr. Sivan explaining this bit.

“Under the present situation, ISRO has reached its limit on providing our services due to manpower limitations and we can’t scale up more than 3 per cent market share. That’s why we need private players to get involved and that will also boost market share when they diversify into many services"

But there’s one other problem that still needs attention — the liability problem. Since the Department of Space is the sole owner of space technology in India, the risk of failure and disaster rests with the state and the state alone. Think   space debris—fragments of spacecraft that are floating in space right now thanks to a mission gone awry. ISRO takes full responsibility for all this trash. But if private players enter the fray — Who takes liability in the event they screw up?

We don’t know yet…

Hopefully, when the new space laws are reworked and the Space Activities Bill is tabled in the parliament we will get a more comprehensive idea of how ISRO plans to get around some of these challenges.

Until then…

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