ISRO’s love-hate relationship with private sector – A look back at history

Published: May 26, 2020 5:50 AM

Why does the private sector love and hate ISRO?

If the Indian space agency is serious about this new push for privatisation, then it should introduce the ‘space law’ in Parliament in the Monsoon session or at least before the new Parliament Complex is made.If the Indian space agency is serious about this new push for privatisation, then it should introduce the ‘space law’ in Parliament in the Monsoon session or at least before the new Parliament Complex is made.

By Pallava Bagla

The surprising announcement by finance minister Nirmala Sitharaman that ‘Indian private sector will be a co-traveller in India’s space journey’ was jarring at one level and music at another. The Indian Space Research Organisation (ISRO) has had a love-hate relationship with the private sector. There are many legal, regulatory, quality assurance and cultural issues that makes it a clash of cultures.

Privatisation of and at ISRO is not a new concept; the first time one heard of hiving off the Polar Satellite Launch Vehicle (PSLV) to the private sector was exactly 20 years ago—it never materialised as there are legal hurdles. That said, even today, 75-80% of the components of the launch vehicle are manufactured by the private industry so the industry is already subcontractor but not owner.

Many Indian companies want to develop their own rocket and satellite technologies and use the taxpayer paid testing facilities at ISRO to try out their products, for which ISRO can charge a fee. Since ISRO is both the judge and jury by owning technologies and being the regulator for space activities, it is reluctant to give up control. But the new initiative by the government may act as a catalyst. In a statement, ISRO said ‘Department of Space will follow government guidelines and enable private players to carry out space activities in the country.’ This is music to many new space start-up initiatives, but there can be many a slip between the cup and the lip.

On the other hand, it was jarring to hear Sitharaman talk about ‘future interplanetary exploration’ when India struggles with an unprecedented humanitarian crisis of not being able to provide decent transport to migrants being displaced due to Covid-19. The ‘long march’ (pun intended as the Chinese rockets are named Long March) continues.
Space is known to be a risky business and no fainthearted can survive in this sector. Returns are high but liabilities are equally high; the lack of a robust Parliament enacted ‘Indian space law’ or as ISRO calls it ‘space activities Bill’ is the biggest stumbling block. For three years it remains just a draft. How liability will be channelled in case of a disaster is not clear. All liabilities are borne by the Indian state or in effect the taxpayer cushions failures. Possibly, rightly so.

The Indian private industry, one has repeatedly seen, loves to work with ISRO but mostly as subcontractors, vendors and component suppliers; it is mostly merit that plays out in the tendering process at ISRO and payments are relatively prompt. But big-time private participation with ISRO has often run into hurdles, one of the episodes is so big that, as a fallout, ISRO has started ‘physical distancing’ (pardon the pun) from its own flagship PSU Antrix. The last time another private player, then a start-up, tried to make use of ISRO resources, it went belly up—it was TeamIndus.

The last time a private player partnered in a big way with ISRO was Devas Multimedia in 2005 in a multi-million dollar contract. But it catapulted by 2010 into what is called the S-band scandal. ISRO was to make and launch two satellites (GSAT 6 and GSAT 6A) and Devas was to provide the ground segment and the connectivity was to be given using the S-band frequency. It was made out to be a Rs 2 lakh crore scandal and finally the contract was annulled. One of our boldest scientists G Madhavan Nair paid the price for this. Devas has been winning cases in international tribunals and the sword of Damocles of coughing up billions of dollars in damages hangs over Antrix with liability passing on to the Department of Space (DOS) and the government of India—the fallout is DOS started treating Antrix as a stepchild.

DOS has even floated a new company called New Space India Ltd, and all business is being diverted to it. This is probably part of a well-calculated strategy for Antrix to become a non-entity and to be left only with liabilities and no assets before declaring it bankrupt. But the liabilities of up to $2 billion may still pass on to the government of India. Looking at this unfortunate tug of war in what the famous space scientist Kiran Karnik called ‘a squeaky clean organisation’, one would be surprised if big players may still want to be full but subordinate partners in India’s space ambitions.

The other case where a private entity wanted to utilise resources of ISRO was TeamIndus—a group of Bengaluru-based starry-eyed entrepreneurs who dreamt of landing a satellite on the moon and bagging the Google Lunar X Prize. They ran out of money and the prize itself was shelved. But in this TeamIndus and ISRO deal, there was constant friction and the falling out between the bold start-up and ISRO was quite bitter, to say the least. The biggest unsaid contention was that puny TeamIndus wanted to achieve what the mammoth Indian space agency wanted to do—i.e. soft land on the moon.

ISRO had its own Chandrayaan-2 in preparation, and TeamIndus’s Ek Choti Si Asha (a tiny hope)—as its lunar rover was named—was all set to steal the thunder from ISRO’s Vikram and Pragyan space crafts. That both ended with badly bruised egos in trying to become the fourth global entity to soft land on the moon is another story. But again a private entity that had an infatuation with ISRO literally retired hurt.

On the other hand, in satellite fabrication, there have been some inroads. Alpha Design Technologies of Bengaluru integrated two satellites for ISRO that have been successfully launched. The design, components and quality control was all with ISRO, only the integration—a precision operation—was done by Alpha engineers. Similarly, a few other private players are working on integration of satellites. Bharat Electronics Ltd and Tata Advanced Systems would also help integrate satellites. In all, 27 satellites are to be integrated with help from the private sector. Experts suggest Indian satellites have about 70% imported components, so an active approach of achieving self-reliance should be adopted.

Recently, DOS made an effort to launch a private sector integrated PSLV rocket for which a consortium of industries have been roped in. This is not the same as private sector owning the PSLV launch. There was also talk of forming a JV company for hiving off PSLV, but then the lack of a ‘space law’ is a big hurdle. Another proposal is the private sector manufactures PSLV and then sells it to ISRO, which then launches, and here the liability will remain with ISRO. Many different templates have been there, but nothing has reached the launch-pad.

Today, there is not even a ‘space Bill’, only a ‘draft’ was circulated in which the big red rag for the private industry was the fact that it stated that ‘any form of intellectual property right developed, generated or created on board a space object in outer space shall be deemed to be the property of the central government.’ Many small new-age space start-ups have been mastering satellite technology and some even attempted but failed to successfully orbit an Indian made satellite.

In space fairing who takes care of the risk in event of a disaster is a big challenge, and today since the sole owner of space technologies in India is DOS, all liabilities are channelled to the government of India. It’s for this reason that ISRO does not take the very expensive insurance of its rockets. I recall the failure of a GSLV in 2006 when it veered off trajectory and was destroyed in mid-air over the Bay of Bengal soon after lift-off. The range safety officer who pulled the trigger on the Rs 300 crore mission said ‘I am not a destroyer but a saviour, I saved Chennai’! Who takes responsibility and who pays for ensuing liabilities are a big issue for private partners.

The other issue for rocketry is it has dual-use technologies and ISRO seeks to keep control of strategic know-how of the strategic technologies. Launch vehicles and missiles share a lot of technologies and India is jittery of letting the know-how pass on to private players.

The technocrats at DOS will have to adopt a whole new work culture if Sitharaman’s pronouncement has to come into full force. ISRO will obviously make favourable noises. If the Indian space agency is serious about this new push for privatisation, then it should introduce the ‘space law’ in Parliament in the Monsoon session or at least before the new Parliament Complex is made. India is a hot spot for developing frugal space missions, but will ISRO embrace the private sector remains an open question. A desi-SpaceX or a desi-Boeing could be a reality if Sitharaman’s wishes gallop on rocket engines rather than horses.

The author has followed India’s space developments for decades; his latest book is ‘Reaching for the Stars: India’s Journey to Moon, Mars and Beyond’ by Bloomsbury. pallava.bagla@gmail.com

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1If Modi govt wants Aatmanirbharta in agriculture, oil palm is a crop to work on
2The economics of Covid-19
3Equalisation levy: ESS EQL may require financial services players to relook at their commercial arrangements