Space-sector reforms: IN-SPACe to mentor startups and private sector; NSIL to monetise ISRO know-how

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The aim of the revamp is to create diversity in space-programme participation, attune services to demand, create growth opportunities, and promote innovation and a profit mindset. This takes some burden off Isro, allowing it to focus on advanced research and explore projects of national importance.

In May 2020, finance minister Nirmala Sitharaman announced that the government was actively pursuing reforms in the space sector to allow private-sector participation in satellite launches and space-based services. The next month, the Union Cabinet approved the establishment of Indian National Space Promotion and Authorisation Centre (IN-SPACe) to provide an administrative environment for private companies to use Indian space infrastructure.

The government in a press release emphasised that IN-SPACe will hand-hold, promote, and guide private industries in space activities through encouraging policies and a friendly regulatory environment. However, techno-economic studies, funding base, seed investment, and insurance will have to be handled by the private sector on its own.

In addition, a public-sector enterprise, New Space India Limited (NSIL), has been incorporated as a commercial arm of the Department of Space to exploit the benefits of the research and development carried out by Isro. It has been mandated with owning and operating satellites, launch-vehicle development, launch services, and technology transfer. NSIL’s role is important in international collaborations, as it can be part of industry consortiums in these areas.

It would be incorrect to assume that private sector is currently not involved in the Indian space industry. Over the last four decades, around 500 Indian companies have been set up, consisting mainly of small- and medium-scale enterprises, which are heavily involved in developing launch and ground-infrastructure facilities in collaboration with The Indian Space Research Organisation (Isro).

However, the lack of a well-defined legal, regulatory, and administrative framework to enable upstream and downstream space activities and sharing of existing space infrastructure has been one of the main reasons why space commerce has not flourished in India as much as in other major space-faring nations. That is what the government is trying to fix.

The Cabinet announcement led to speculation that Isro might be privatised. But in a webinar titled ‘Unlocking India’s Potential in Space Sector’, Isro’s chairman asserted that the question of privatisation does not arise in the context of the government implementing structural reforms in the space sector. The reforms are aimed at encouraging participation by non-governmental private entities (NGPEs).

This is in line with the announcements made by the minister of state for space and atomic energy that the ‘Atmanirbhar Bharat’ roadmap envisages private participation in space activities, and NGPEs would be “co-travellers” in India’s space sector journey.

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IN-SPACe

IN-SPACe, which has been established as an autonomous nodal agency of the Department of Space, will act as a facilitator and regulator for NGPEs. It might take about six months for IN-SPACe to be fully operational. In the meantime, applicants can submit their requirements to the department through an interim mechanism.

A licensing, authorisation, and supervisory regime has been put in place through IN-SPACe because NGPEs will need its permission for activities such as launch campaigns and services, operation of spacecraft, and provision of space-based services. The need to authorise and supervise NGPEs emanates from Article VI of the Outer Space Treaty, which India ratified in 1982.

The IN-SPACe board will comprise institutional members, industry and academic experts, and representatives from the Department of Space. It will be empowered to take independent decisions, with its own cadre for institutionalising the secretariat, administration, and directorates. Day-to-day functions will be managed by various directorates responsible for technical, legal, safety, and security matters and for monitoring and activity promotion.

Decisions made by IN-SPACe will be binding on all stakeholders, and appeals against its decisions will be adjudicated by an appellate authority. Currently, the Telecom Disputes Settlement and Appellate Tribunal has been proposed to be the appellate authority. It remains to be seen if a tribunal mandated to deal with telecom matters can pass muster on deciding judicial propriety for outer-space activities.

IN-SPACe’s role of hand-holding, promoting, and guiding the private industries can be done by its activity-promotion directorate. In the initial phase, Isro’s expertise and space infrastructure will provide a boost to private industry and mitigate safety risks.

IN-SPACe is a much-awaited independent single-window system that can remove entry barriers for corporations and startups. However, its success will hinge on reducing the time taken for licensing procedures. This can be achieved by setting deadlines and holding pre-consultation workshops.

Currently, it is not yet clear how inter-agency procedures will work to avoid delays. Take security clearances required for investors — will there be an integrated system for clearances by the Ministry of Home Affairs, similar to the mechanism adopted by the aviation sector? Hope a clear picture will emerge in the future.

Key components of the reforms

1. Risk allocation and liability: Article VII of the Outer Space Treaty read with Article I, II, and III of the UN Liability Convention (which India has ratified) prescribes that state parties shall be internationally liable for damage caused by space objects or its components either procured or launched by such state parties, including its NGPEs.

Such liability may be either absolute or fault-based, depending on whether such damage is caused on the earth’s surface or outer space. “Damage” means loss of life, personal injury, or other impairment of health, or loss of or damage to property of states or of persons, natural or juridical, or property of international intergovernmental organisations.

During its webinar, Isro said that a national space legislation in the form of the revised Space Activities Bill has been submitted to the Prime Minister’s Office and is under inter-ministerial consultation. It broadly aims to regulate space activities in India; authorise and supervise the conduct of space activities by persons connected to India; fulfil India’s international obligations related to launching and operation of space objects and the carrying on of other activities in outer space.

While it formulates a licensing regime and allocates liability to the licensee against claims brought against the government in respect of any damage or loss arising out of a commercial space activity or in relation to a space object covered under the licence, it leaves the quantum of such liability to be determined by the government.

The quantum of liability for damage caused by space objects could be quite debilitating for a nascent space industry in India. In 1978, when the Soviet satellite, Cosmos 954, intruded into Canadian air space causing deposit of radioactive debris in Canadian territory, Canada incurred a cost of USD13 million to clean up the debris, against which Canada and the Soviet Union entered into a settlement of USD6 million to be paid as compensation.

Therefore, the quantum of liability should be pre-determined by the government by way of delegated legislations (for instance, space activity regulations). This will enable NGPEs to obtain insurance and financial assistance. It might be prudent to put a ceiling on the quantum, beyond which concession on liability must be granted by the government.

Similar liability regimes are also followed in the US, UK, France, China, Russia, and Japan, where the amount of acceptable insurance amount ranges between USD100 and USD500 million. A lower cap on liability for a nascent space industry will help with obtaining proper insurance coverage.

2. Intellectual-property rights: Clause 25(2) of the draft Space Activities Bill states that any form of intellectual-property rights developed onboard an Indian space object in outer space will be the property of the Indian government.

While this clause has come under severe criticism by industry experts, issues relating to intellectual property can be addressed contractually and through existing intellectual property laws. A similar approach has been followed in the US, where the US Patent Code’s Title 35 provides the legislative framework for governing intellectual property issues related to the space sector. It is expected that the draft bill to be presented to parliament will address this issue.

3. International collaboration and cooperation: Currently, the foreign direct investment (FDI) policy allows up to 100% foreign investment in satellite establishment and operation, subject to the sectoral guidelines of the Department of Space and Isro.

Guidance on the FDI policy can be taken from the telecom sector, where 100% FDI is allowed and 49% is allowed under an automatic route. Such a policy will help startups obtain venture funding. FDI with appropriate levels via the government route can also be permitted for other areas of space activities such as launch-vehicle development and launch services, considering the dual-use nature of these technologies. FDI in other areas of downstream space-based services may also be considered.

4. Policy revamp: It was also announced during ISRO’s webinar that the current archaic policies in remote sensing and satellite communication are under revision, which will likely make them industry friendly. The government is also expected to come up with a new navigation policy.

To round off, the expectation from space-sector reforms is to create diversity in space programmes through NGPE participation, make them demand driven, create growth opportunities, and promote innovation and profit making. This will help Isro focus on advanced research in space technology and exploration and projects of national importance and security.

The views expressed in this article are personal.

The author is a lawyer working with AZB & Partners, Mumbai, and has been a research scholar with UNIDROIT on global navigation-satellite systems. The author is grateful to V Gopalakrishnan, former policy analyst, Isro, for his invaluable guidance on this article.

Author:

Rishiraj Baruah, Associate

Published In:Economic Times Prime
Date: September 16, 2020