In this emerging era of space economy, ISRO has been laying its own small and credible claim.
When India Space Research Organisation, or ISRO, put Mangalyaan in Mars orbit in 2014, India became only the fourth country in the world and the first in Asia to achieve the feat. India also became the only country to date to get it right on its maiden attempt. Considering that India’s space agency launched its own satellite for the first time only in 1980, more than two decades after the US and the erstwhile USSR began their race in space, the MOM, short for Mars orbiter mission or the other name for Mangalyaan (sanskrit for Mars-craft), was a tremendous achievement.
But the clincher was the cost. ISRO executed the project at a $74 million; about one-tenth the cost of US space agency NASA’s Mars mission and less than the cost of making a movie about space.
That the Mangalyaan success came at a time that the United States is disrupting space commerce made the vested members of the elite global space club nervous.
First some context. Space commerce is set to boom. About 1,400 satellites are expected to be manufactured and launched in a decade from 2014. Earth’s orbits are getting more democratised and personal satellites may soon be as commonplace as owning a really expensive sports car. The initial spurt of commercial activity is bringing down the cost of accessing space, which in turn creates a virtuous cycle for more commercial activity. As Bob Richards, the CEO of Moon Express, a company looking to carry cargo to moon, quipped, “The next trillionaires will be created in space.”
In this emerging era of space economy, ISRO has been laying its own small and credible claim. The organisation has launched more than a hundred satellites with a majority of these belonging to other countries. In 2016, it set a new record for itself by using one launch to place 20 satellites in a low earth orbit (LEO).
To be sure, ISRO is not unique in pulling off a multi-satellite launch. In 2014, Russia put 37 satellites in space and since then American rockets have carried 29 or more satellites thrice into space. Increasing the number of satellites per launch is not a major feat of technical innovation even though it involves complex engineering wizardry. Yet, for ISRO, it is an event of significance because such multi-satellite aggregations significantly bring down the cost of putting a satellite in orbit.
And ISRO’s cost advantage for satellite launches is staggering.
While US entrepreneur Elon Musk’s Space X Falcon 9 launches satellites into orbit at $60 million and China struggles to compete with it on costs, ISRO’s trusted launch buggy, the Polar Synchronous Launch Vehicle, or PSLV, puts satellites in orbit for around $15-20 million — though carrying smaller payloads. Clearly, ISRO is a serious contender to launch many more satellites. At least, in the short run.
Despite its staggeringly low cost, ISRO’s share of the $200 billion satellite market is minuscule. This is driven by a couple of key factors.
One, ISRO has a capacity constraint. In an industry with months and years of pipeline, available capacity becomes more valuable than being cheaper at some point. Today, ISRO can pull off eight launches in a year at best and it may not be possible to carry 20+ satellites every time. The demand, however, is much more.
Two, ISRO is technologically limited to launching small and medium sized satellites. The PSLV rocket can carry only up to around 3,250 kg to LEO. In comparison Space X’s Falcon 9 can carry more than 20,000 kgs — a 6:1 advantage that negates the low-cost edge of ISRO’s trusted steed, the PSLV. The lucrative higher payload market lies beyond the reach of PSLV, clearly.
But the biggest challenge is likely to come in the form of launch technology disruption driven from the Silicon Valley in California. Over the last several years, NASA has been increasingly turning over LEO access to private players while it begins to focus on deep space missions. It has come after the recognition of the fact that the old-way of doing things is just not profitable enough, fast enough and disruptive enough to make space more accessible.
NewSpace companies are emerging, led by dreamy, risk-seeking entrepreneurs ready to commit billions of dollars in search of longer term profits. The thinking has shifted from closed, secretive, monolith-led space exploration to a commercial democratization that is seeing hundreds of smaller companies working on little innovations that help solve pieces of the space puzzle.
Musk, an extreme risk taker even by Silicon Valley standards, leads that pack with Space X (others such as Blue Origin, a private company of Amazon founder Jeff Bezos are in the race, too). Space X has been disruptive with its super-affordable LEO launches. It was made possible by bringing in fresh thinking around production (like using 3D printing for certain parts) and process (having a more vertically integrated company). But Musk is striving for even larger gamechangers by making his launch rockets (or parts of it) return to earth and be used on subsequent trips to space. When that happens, trips cost to LEO is going to plummet even further.
It is competition like these that’s likely to break ISRO’s cost advantage and one that it needs to prepare for. But they also present a template for our pioneering organization to follow.
Playing on the cost card in the international market sounds familiar to us. It is the basis that propelled the wave of information technology outsourcing that disrupted world economy significantly. Despite whatever limitations it may have had, the wave did significantly pull up the quality of life for a section of India. Its trickle-down effects have had some massive benefits (and some big problems that need to be addressed) including expanding consumption. One could even argue that the explosion of intermingling with world economies was influential in the new wave of innovation-focused (okay, relatively speaking) startups we see today in India.
While the dynamics are different and the competition is more intense, India has a chance to participate in a similar growth in the commercial space market. Some of the same strengths that enabled India to succeed in the IT revolution – engineering talent, higher education and years of government investments in building capabilities – can enable us to be successful in participating in this new boom.
The economic benefits are right there to see. Participating in the market is lucrative for India. In the last fiscal year alone ISRO (through its commercial arm, Antrix) earned Rs 1,860 crore in revenues despite its miniscule share of the satellite launch market. This can easily be expanded leveraging the strong base of space-science research that India has funded for long years. It makes economic sense to leverage it during this period of commercial boom.
Besides, India’s own domestic needs in terms of eyes-in-space helping us with everything ranging from crop growth patterns to cyclone warnings to national security issues will tie in closely with any investments being made through participation in this new economy. And, as the consumer market in India grows, there will be greater demand for satellite services for GPS, communication, DTH and data transmission.
Beyond all this, the benefits of seeding a hybrid market of hi-tech products and services and larger space industry ecosystem are even bigger. For instance, ISRO has already transferred over 300 new technologies to industries ranging from computer science to material sciences to electro optical systems.
ISRO, till date, remains the most cost-efficient option for countries looking to deploy their small and medium satellites in orbit. The good news is that the market for smaller satellites is on the rise. In 2014, the smaller Cubesats accounted for nearly two-thirds of all satellite launches. Yet, these smaller satellites account for a very miniscule percent of the revenue.
In order for ISRO to truly take advantage of its cost advantages, it needs to fill its capacity and capability gaps quickly. ISRO is working on capabilities to push heavier payloads into space through its GSLV Mk-III which can carry up to 8,000 kg to LEOs thus helping it enter into a larger market. Additionally, ISRO is looking at cost disruptions much like Space X by bringing back rockets for usage in future launches — in May 2016, ISRO successfully tested a demonstrator reusable launch vehicle that came back to land in the Bay of Bengal.
But in order for India to truly be a part of the global space boom, ISRO needs to expand beyond its fief. Imagine how India will push the envelope in space, when hundreds of Indian entrepreneurs and companies begin contributing to products and services in the global space market.
Spurring a new private ecosystem in space is analogous to a four-stage rocket launch. It requires a sequence of steps to fire at the right moments in order to place the payload in orbit. The first is a guaranteed downstream market that integrates, consumes and pays for products or services. The second is setting a layer of manufacturing and service infrastructure that can contribute to these demands. The third is triggering innovation that discovers a bigger value for the downstream consumers. The fourth is the final thrust that would place the industry in orbit and comes in the form of entrepreneurs and investors who take risks, deploy capital, and organise innovators into creating things that pay off.
India’s space and defence industries are closely interlinked (like the rest of the world) as they have strong synergies in terms of research, manufacturing, and services. In terms of a large downstream market, one needs to look no further than the Indian government which spends more than $50 billion annually on defence and space combined.
There is indication that this market is opening up for the private sector. India’s defense sector is easing procurement norms which in turn will increase the participation of private sector. There is focus on local procurement and more importantly, a mandate for global contractors participating in large contracts (more than Rs. 300 crore) to procure at least 30% components from local sources. This promises to segue into a space development outsourcing industry. The ‘Make in India’ initiative too has identified space as one of the 25 sectors to court investments and incentivise the local industry.
All this is likely to result in a mushrooming of component makers, assemblers and manufacturers who will constitute the early infrastructure layer allowing innovators to shine.
While India is lucky to have strong institutions (IITs, IISC, IIST etc.) that can produce the brain-trust required, it requires ISRO and the government to open up channels of participation in order for this layer to congeal. ISRO’s most valuable resource, its brainpower, can be deputed for fixed periods to guide and build a nascent pool of innovators. Here, India’s own dubious record in intellectual property infringements need to be countered through strong policy that protects and encourages innovation. This will also pave the way for infusion of ideas from other countries as Indians working on innovative, cutting-edge technologies migrate back to be part of the growth story. It is essential for the government to enable this layer as much as the first two in order for the industry to evolve.
The final layer is critical for the industry to build and scale. Here, India’s nascent comfort with entrepreneurship and the opening up of private fund markets has set up a skeletal ecosystem that can look at supporting the innovations through fund infusions. Global VCs, who are making bolder moon-shot investments, will look to tap into India’s potential when a strong demonstration of innovation is displayed and infrastructure is built. India’s own smaller investment market made up of local VCs, angel investors and large business owners will follow with supporting roles.
We have begun to take baby steps in this direction. A clutch of wide-eyed space cowboys are already building space startups. Earth2Orbit sells launch services and value-added space imagery data. Dhruva Space, that claims to be India’s first private space organization, is making satellites in India. The most ambitious of them all is Team Indus that dreams of landing rovers on the moon. It is looking to raise nearly $60 mn in funding and has as one of its investors and advisors, quite fittingly, a pioneer from India’s first outsourcing boom, Nandan Nilekani.
Decades of government support has given us a spot at the driving seat in the journey to new frontiers. But nothing is guaranteed.
As the Devas fiasco highlights, poor foresight, corruption and bureaucratic hassles can set us back severely leaving us in the dust as the rest of planet begins to fly away.