Space Economy in India – Explained, pointwise

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Space exploration commenced with the launch of Sputnik 1, the first artificial satellite, in 1957. The cold war era was characterized by the intense race between the erstwhile USSR and the US, to dominate the space. This space race was led by the Government owned agencies of the US and USSR. The global space economy has undergone considerable changes since then, with the entry of the private sector in space economy as the most prominent development. In the modern day, for the first time in 2020, humans accessed space in a vehicle not built by a government agency. 

What is the current status of the Space Economy?

The $447 billion global space market includes: (a) Upstream market (commercial satellite market, launch market, and institutional market); (b) Midstream market (operator revenue, ground infrastructure, and operations); (c) Downstream market (space services and consumer equipment).

Another basis of classification divides space economy into 3 components: (a) Manufacturing of Space-related Equipment (satellites, launch vehicles and ancillary equipment); (b) Space operations (launch operations, space surveillance, tracking, lease, brokerage, etc); (c) Space Applications (Direct to Home broadcast, satellite telephony, remote sensing, etc).

Researchers from the Centre for Development Studies (CDS) and the Indian Institute of Space Science and Technology (IIST) undertook a  first-of-its kind attempt at measuring the size of India’s space economy. The findings were outlined in a paper titled ‘The Space Economy of India: Its Size and Structure‘ 

They arrived at a figure of INR 36,794 crore (approximately US$ 5 billion) for the 2020-21 fiscal. Further, 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. According to the paper, space applications accounted for the major chunk of this evolving space economy, constituting 73.57% (INR 27,061 crore) in 2020-21. It was followed by space operations (INR 8,218.82 crore or 22.31%) and manufacturing (INR 1515.59 crore or 4.12%).

Space Economy in India UPSC

In terms of GDP, India’s spending is more than that of China, Germany, Italy and Japan, but less than the U.S. and Russia. The Global Space Economy is poised to reach US$ 650 billion by 2030. India has the potential to capture a large share of this expanding sector.

Global Space Economy UPSC

Source: Euroconsult

What is the need to focus on the Space Economy?

Huge untapped potential: India manages to occupy only 2%, or US$ 7 billion, of the global space economy. The small share isn’t solely due to technology and resources but also because of policy.

Read More: [Yojana January Summary] India as a Space Power – Explained, pointwise

Boosting the Economy: Allowing private entities into end-to-end space activity would help in achieving a US$ 5 trillion economy by 2024. Further, the space economy market is said to grow over US$ 1 trillion by 2040.

Low Cost: The Indian space sector has the potential of launching space vehicles at a much lower cost. This was seen in the Mars Orbiter Mission which was 10 times cheaper than western missions. This will help in getting many foreign contracts.

Rising Demand: It is estimated that around 10,000 satellites will be launched into low-earth orbit by 2026. Further, the projected growth of small and miniature satellites has increased three times, growing from US$ 12.6 billion to US$ 42.8 billion. This provides ample opportunities for small and medium enterprises to enter into the sector.

Presence of Budding Entrepreneurs: According to a global report published in June 2021, India has 368 private space firms, placing it 5th in the world in size after the US, the United Kingdom, Canada, and Germany. With these many firms, India is leading China (288), France (269), and Spain (206) in the private space industry.

Read More: A launch window for India as a space start-up hub
What steps have been taken by the Government to boost the Space Economy?

Indian Space Association (ISpA): It aspires to be the collective voice of the Indian Space industry. ISpA will be represented by leading domestic and global corporations that have advanced capabilities in space and satellite technologies.

Read More: Indian Space Association (ISpA) – Explained, pointwise

Indian National Space Promotion and Authorisation Centre (IN-SPACe): It aims to provide a level-playing field for private companies to use the Indian space architecture. IN-SPACe will act as a channel between ISRO and any private players that want to participate in space activity, thereby culling lengthy bureaucratic procedures. It will benefit in two ways: (a) It will allow more research and scholarly work by individuals who have the capability. For example encouraging something similar to SpaceX in India; (b) It will allow ISRO to focus on more challenging missions and especially next-generation technology development.

Opening the Space Sector: The Government in June 2020 opened up the Space sector allowing the participation of the Indian private sector in the entire domain of space activities. This includes satellite creation, launches, and space-based services that were earlier not open to them.

Antrix Corporation: It is a government-owned company under the administrative control of the Department of Space. It was established in 1992 for commercially utilizing space products of ISRO, providing technical consultancy services and transferring technologies to industry.

Draft Space Activities Bill, 2017: The Bill aims to promote and regulate the space activities of India. It focuses on encouraging the participation of private sector agencies under the guidance and authorisation of the government through the Department of Space.

New Space India Limited (NSIL): It is a Central Public Sector Enterprise under the Department of Space that was established in 2019. It has been mandated to transfer the technologies emanating out of the Indian space programme and enable Indian industry to scale up high-technology manufacturing base. 

What are the challenges in the development of the Space Economy?

Budgetary Constraints: The CDS and IIST study noticed a decline in the budget for space-related activities. This led to a reduction in the size of the space economy in the last two years. The budget outlay in 2020-21 was INR 9,500 crore, shrinking from INR 13,033.2 crore in the previous fiscal.

Lack of Data: The current CDS and IIST paper was a first-time attempt at scientifically measuring the size of the space economy. Further even this was unable to establish the size of the space-based remote sensing industry.

Space Debris: Since the market is open, more corporations can send their vehicles and satellites up into space, which is already crowded. By some estimates, there are over 15,000 traceable and over 200,000 1-10 cm pieces.

Absence of a Legislative Framework: The draft Space Activities bill was introduced in 2017 but has been pending since then.

Brain Drain: India produces the best brains of the world but is unable to retain them. People emigrate from the country for better opportunities and careers that might hamper development of the space sector.

Lack of robust Dispute Settlement Mechanism: This discourages private investment in the space sector e.g., the cancellation of Antrix-Devas deal has impacted investor confidence and hurt India’s reputation as investment destination internationally.

What more steps can be taken?

First, the policies of opening the space sector to private players should be duly implemented. They are likely to enlarge the size of the sector through enhanced private investment and improved integration with the global private space industry. The government should also enhance collaboration between Indian private players and big private players from across the globe like SpaceX, Virgin Galactic etc.

Second, the FDI reform is crucial to further decentralize investments. The US firm Hughes Communications announced a US$ 500 million investment but has not been able to get approvals since 2017. Therefore, IN-SPACe needs to act on its mandate and allow not only foreign entities but also domestic innovators to get around the bureaucracy.

Third, in case of space debris, coordination between the public and private sector will come into play. The government can decide on exactly how many programmes can be allowed in space and if they can partner in the removal of space debris.

Fourth,  The passage of the Space Activities Bill should also be done in order to give private players greater clarity and protection. This should involve proper consultation and discussions with the concerned stakeholders.


The current scenario presents an ideal opportunity for India to unleash the potential of space economy. In this regard, right policy initiatives and support are desired to make the space economy reach its target of US$ 50 billion by 2024.

Source: The Times of India, The Hindu, Mint

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