Contribution of Space Sector to India’s GDP

General Studies Paper-3

Context: India’s space sector has directly contributed about $24 billion (₹20,000 crore) to India’s Gross Domestic Product over the last decade.

Space Sector of India

• India’s space sector has benefitted from decades of consistent investment, with $13 billion invested in the last decade.
• It is the 8th largest space economy (in terms of funding) in the world.
• In the recently announced Union Budget for 2024-25, India’s space sector received a significant boost.
• The Central government allocated ₹13,042.75 crore to support space-related initiatives.

Contribution of Space Sector to India’s GDP

• The Sector has supported 96,000 jobs in the public and private sector.
• For every dollar produced by the space sector, there was a multiplier effect of $2.54 to the Indian economy and India’s space force was 2.5 times more productive than the country’s broader industrial workforce.
• The Indian space sector was diversifying and now had 700 companies including 200 start-ups and had seen revenues grow to $6.3 billion in 2023, which was about 1.5% of the global space market.
• Satellite communications contributed 54% to the space economy, followed by navigation (26%) and launches (11%).
• The main industries supported by the space sector were telecom (25%), information technology (10%) and administrative services (7%).

FDI in space sector

• Under the amended FDI policy, 100% FDI is allowed in the space sector. The entry route for the various activities are as follows:
• Up to 74% under Automatic route: Satellites-Manufacturing & Operation, Satellite Data Products and Ground Segment & User Segment.
• Up to 49% under Automatic route: Launch Vehicles and associated systems or subsystems, Creation of Spaceports for launching and receiving Spacecraft.
• Up to 100% under Automatic route: Manufacturing of components and systems/ sub-systems for satellites, ground segment and user segment.

Potential of Space Sector

• Export Potential and Investment: Currently, India’s export market share in space-related services stands at ₹2,400 crore (about $0.3 billion). The goal is to boost this to ₹88,000 crore ($11 billion).
• Rise of Space Tourism: In 2023, the space tourism market was valued at $848.28 million.
• It is expected to grow to $27,861.99 million by 2032.

Challenges in India’s Space Sector

• Competition and Global Market Share: To achieve this ambitious goal of 8% of the global market share, Indian space companies must compete effectively on the international stage.
• Private Sector Participation: While the private sector has shown interest, there’s a need for more substantial investment and commitment.
• Technology Development and Innovation: Developing cutting-edge technologies, such as reusable launch vehicles, miniaturized satellites, and advanced propulsion systems, requires substantial investment and research.
• Regulatory Framework and Licensing: Navigating licensing processes, export controls, and compliance can be complex.
• Infrastructure and Facilities: Developing and maintaining such infrastructure requires significant capital.

Major Reforms In Space Sector of India

• Indian Space Policy 2023: It laid down roles and responsibilities of organizations such as ISRO, New Space India Limited (NSIL) and private sector entities.
• It aims to enhance the participation of research, academia, startups and industry.
• Strategic Proposals by SIA: The Space Industry Association – India (SIA-India) in its Pre-Budget Memorandum for the FY 2024-25 has proposed a substantial increase in India’s space budget.
• It aims to support India’s expanding space program, foster private sector involvement, drive technological advancements, and position the nation as a key player in the dynamic global space ecosystem.

Way Ahead

• India aims to commission the Bharatiya Antariksha Station (BAS) by 2035 and land Indian astronauts on the Moon by 2040.
• Private entities are now actively involved in crucial aspects of research, manufacturing, and fabrication of rockets and satellites, fostering a vibrant ecosystem of innovation. It is expected to integrate Indian companies into global value chains.
• With this, companies will be able to set up their manufacturing facilities within the country duly encouraging ‘Make In India (MII)’ and ‘Atmanirbhar Bharat’ initiatives of the Government.