Final frontier, first opportunities

India’s successful moon mission has shone a light on the expanding involvement of private companies in space. The afterburners are being applied to previously held-up projects. Chandu Gopal reports

As the Chandrayaan-3 rover mission landed lightly on the moon, the impact rippled through the stock market; most specifically, it lit the fuse on companies involved in supplying equipment and components to the space sector. Together, they gained an astronomical INR130 billion (USD1.5 billion) of market value in a single day.

Take a look at some of the notable stock surges on 23 August, the day of the mission:

• Centum Electronics: This provider of systems to the Indian Space Research Organisation (ISRO) witnessed a 14% surge in its share price.
• Godrej Industries: With its subsidiary, Godrej Aerospace, supplying components to ISRO, the company’s shares jumped 7%.
• Hindustan Aeronautics: The manufacturer of the Lander Module “Vikram” for Chandrayaan-3, saw its stock rise by 3.5%.
• Linde India: This spacecraft component supplier experienced a surge of more than 23% over the week.

Freed from the state’s previous policy-bound monopoly, the private sector’s expanding involvement in India’s space sector became evident with the liftoff of ISRO’s Chandrayaan-3 mission.

It is a significant change, further helped by the recent Indian Space Policy of April 2023, which provides a level playing field and favourable regulatory environment for private companies.

In a drastic departure from the previous norms, the policy integrates private entities as independent contributors to space exploration and technological advancement; not just as suppliers or vendors.

The ISRO policy document, “Opening up of Space Sector”, states: “The global space economy is currently valued at about USD360 billion. Despite being one among a few spacefaring nations in the world, India accounts for only about 2% of the space economy.”

Elsewhere in the world, the private sector has assumed a progressively more significant role in space industries in the past two decades. However, in India, private space industry entities primarily have always functioned as vendors or suppliers to the government’s space programme.

“The [new space] policy creates a clear path for participation of the private sector and for the first time recognises the ability for the private space industry to participate in the market,” says Arjun Sinha, a partner at AP & Partners in New Delhi.

“This is a welcome change from the 1991 policy, which was fairly ambiguous on international participation and gave a clear preference to domestic state-owned enterprises.”

Please queue politely

Notable names like Larsen and Toubro, Hindustan Aeronautics, Bharat Heavy Electricals, Paras Defence and Space Technologies, and Godrej Aerospace are retuning their expertise to make a mark in the celestial realm.

However, amid growing optimism in the opportunities, conversations with stakeholders reveal a landscape riddled with challenges. The complex web of legal intricacies presents a multifaceted endeavour.

The paramount concerns centre on building strong partnerships between private entities and the ISRO while safeguarding intellectual property rights, fostering fair competition, and adhering to ever-evolving regulations.

But, beyond the challenges lies the lure of creating a thriving space industry for the country. The integration of private players into India’s space programme promises to unlock new opportunities and innovation.

Burgeoning private participation in India’s space efforts will add to the transnational flavour of humankind’s space exploration. Consequently, international legal provisions assume paramount importance.

Agreements like the UN Outer Space Treaty, which governs nations’ exploration and use of outer space, and of which India is a signatory, underscore a peaceful utilisation of outer space and impartial access for all nations.

Nonetheless, the current legal scaffolding often lacks specificity around private stakeholders. Ambiguities surface over cross-border collaborations, safeguarding IP rights and arbitrative mechanisms.

Legal pundits underscore the imperative of harmonising India’s domestic regulations with international benchmarks to ensure a seamless environment for private enterprises navigating a global arena.

India’s space policy allows private companies to do various things in space technology, like providing communication services, operating ground facilities and launching satellites. It also lets them use and sell space resources.

These opportunities are significant for private businesses but they come with legal, regulatory and contractual risks, says Rajesh Vellakkat, partner at Fox Mandal’s Bengaluru office. Vellakkat leads the firm’s technology and startup team while also overseeing the corporate governance and capital market division.

“The challenges primarily stem from the ambiguity within the legal and regulatory realms, both domestic and international,” he says, emphasising a need for “precise legislation” on technological interdependencies, liabilities, indemnification, third-party risks, and actions by international and foreign governments.

However, outer space is not a cosmic lawless wild west. Apart from the respective space policies of their nations, any business that wishes to operate on that front is bound to operate within the parameters set by the UN Committee on the Peaceful Uses of Outer Space (COPUOS).