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Why You Should Care About India’s New Private Sector Space Activities Bill

The Bill fails to address specific space-based activities separately, instead trying to cover large swaths of the space value chain in one go. It will not do justice to the entrepreneurial community if it is implemented as is.

The PSLV C31 before its launch. Credit: ISRO

The PSLV C31 before its launch. Credit: ISRO

India has had a space programme for over 50 years now. Led by the Indian Space Research Organisation (ISRO), we have acquired the ability to build satellites, launch vehicles and use ground control to serve the people of India with space-based services. Space is acting as an enabler today to provide several services, such as direct-to-home broadcasting, VSAT for bank ATM machines, weather services, disaster management, search and rescue, navigation services, imagery based geographical information systems, etc.

In 2015, Prime Minister Narendra Modi addressed a national meet of top officials from different ministries and state governments on the use of space applications in daily governance. It included 1,500 delegates, mostly the secretaries of central ministries and departments. The meet was to assess the current utilisation of space-technology-based tools in their respective offices and explore potential application areas. This led to the increased demand for space-based services with a roadmap to have over 60 satellites launched in the next five years, requiring 60 rockets to do so.

The rise of private sector participation

ISRO is mainly a R&D-focused organisation; it has created the technological foundation for rockets, satellites and ground usage. However, to realise such a large number of space systems, private partnerships have been sought. A public-private partnership (PPP) model is now being eyed to realise ISRO’s workhorse Polar Satellite Launch Vehicle (PSLV), with a joint venture between ISRO and the private sector.

While the first rocket by the PPP model may be slated for launch only in 2020 or 2021, ISRO has also invited the private sector to build 30 satellites. These are excellent developments that will allow the private sector in India to move towards gaining expertise in building complete systems and eventually help them market it globally as well. It will solve capacity problems for ISRO and also help the organisation spend its resources in creating next-generation technologies and applications. A.k.a., a win-win – for both taxpayers and private players.

We are today also witnessing the rise of NewSpace in India, with startups like TeamIndus, Bellatrix Aerospace and Astrome Technologies that are planning their own space-based products and services. The difference between these companies and the 500 industries that have traditionally worked with ISRO is that they are generating their own intellectual property for an independent product or service (e.g. satellite-based broadband) with ISRO neither being their sole or largest customer nor providing them IP and ensuring buy-backs (which was how most suppliers in the Indian space ecosystem were born over the last three decades).

Laws of the final frontier

Space is not the Wild West. In fact, India was one of the major contributors to the Outer Space Treaty put in place by the UN to ensure states acted in good faith when using space for peaceful purposes. It laid down the ‘Principles Governing the Activities of States in the Exploration and Use of Outer Space, including the Moon and Other Celestial Bodies’. While India is a party to the Outer Space Treaty, where one of the fundamental requirements laid upon states is the supervision of space activities within its borders, the country did not have any formally legislated laws. One could say that this was not a major necessity since the Government of India, with the Department of Space (DoS) acting on its behalf, created all the necessary infrastructure for space-based services.

However, about two decades ago, the private sector began expressing interest in satellite-based services. The Subhas-Chandra-led Essel Group’s Agrani Satellite Services Limited applied for a license to operate a geostationary satellite. So DoS put in place a SatCom Policy in 2000, with a framework to provide licenses to private sector players to operate communication satellites over India. However, the Agrani venture fell apart after the project ran into export licence issues under US munitions restrictions imposed after India’s nuclear tests. The DoS has not issued any license since to any private sector actor. Similarly, to administer the usage of remote sensing data products, the remote sensing data policy (RSDP) was put in place as a balancing act – to promote GIS products for commercial applications and to make sure national security concerns based on the resolution, location and the actors were met.

But apart from these two (non-legislated) policies, there has been no formal law in the country that provided any framework for creating a private space venture. The lack of independent private participation in space also include the absence of a framework to provide transparency, timelines on licensing, issuance of authorisation and continuous supervision mechanism (in accordance with the Outer Space Treaty); matters related to insurance, management of space frequencies, taxation code for trade of satellites, indemnification and dispute resolution, among others. These issues need to be addressed today to provide a stronger thrust for ‘Make in India’ as well as FDI in space.

The ‘Space Activities 2017’ Bill

However, the increasing interest in participating in India’s space sector among private players has led to a draft ‘Space Activities 2017’ Bill released by the DoS. Its main objective seems to be the governance of ‘Commercial Space Activities’. A chapter-to-chapter reading of the Bill provides some insights into how the Bill will work as a legislative instrument (if passed) as well as, sadly, how it will do little to alleviate what is bothering India’s private space players.

The definition of ‘space activity’ as mentioned in Chapter 1 affects the scope of the entities that will come under the ambit of the Bill. The definition is:

‘“space activity” means the launch of any space object, use of space object, operation, guidance and entry of space object into and from outer space and all functions for performing the said activities including the procurement of the objects for the said purposes.’

The use of ‘space object’ pulls every space-based application into its ambit. This even includes every piece of hardware that carries a GPS/GNSS receiver (e.g. smartphones, sports gear, computers, tablets, child/pet trackers, etc.). So nobody in the industry will benefit in case licenses are needed for them to even use a GPS/GNSS chip tomorrow in their product.

Similarly, internet companies that use locational services as part of their operations may now be said to be performing ‘space activities’, since they are using space objects (GPS) to provide locational services. This might then affect the services of companies like Ola and Uber, navigation services providers like Google Maps, banking services, and so forth.

It makes more sense to break down the Bill into multiple sections, each to address specific parts of the value chain. Dividing activities further into upstream and downstream blocks will allow legislators to provide a solid foundation to products/services developed by the non-governmental and private sectors within the value chain.

For example, upstream activity can be broken down thus: development and manufacturing of satellites, rockets, and services rendered to enable getting space objects into orbit. Similarly, the downstream can be broken down into development and manufacture of ground segments, receivers, ground equipment and services include broadcasting, VSAT, imagery/GIS, navigational products/services and voice/data services. There are new services emerging internationally such as satellite-based broadband, satellite-based IoT, satellite-based blockchain services and Indian startups should be able to join them easily and quickly.

Licensing requirements

The legal frameworks needed so each of these activities can operate efficiently are very different from each other. Activities like development and manufacturing of launch vehicles and other such critical export-controlled items (under SCOMET, pg. 1) need to have an enhanced legal framework to meet international obligations. Similarly, there are legitimate national security concerns of downstream products, such as images and communications. A blanket cover within the Bill to use abstract licensing procedures to address upstream and downstream activities does not make business sense. Instead, breaking down the Bill into specific activities will allow users to frame business rules and address international obligations, national security, environmental, health/safety, etc., concerns better.

Moreover, the Bill in its current form does little to address the ease of doing business, a term that has been bandied about in the last few years. The licensing requirement stated within the Bill makes it harder for entrepreneurs to kick-off their products/services. The government should note that not all products and services being conceived by non-governmental and private sector actors will reach the market. While licensing is necessary to use frequencies to operate a space object, it makes perfect sense to insert clauses for specific activities within the value chain when entrepreneurs are ready with their offerings – in export of space systems/services, launch of rockets, etc.

Space is a very difficult sector to do business in, with barriers to entry being quite high in some activities both in terms of capital as well as IP stipulations. Blanket licensing requirements at the beginning of the tunnel for startups andSMEs will make it harder for them to even start their development work. Therefore, licensing may be placed as a requirement just before the release of the product/service into the market or at the time of its export. This will ensure startups can focus on getting their product/service ready and not worry about licensing requirements.

Assigning a nodal body

The Bill has not specified any department or body within the Government of India to take ownership of regulating space activities. Since ISRO is managed by the DoS, an independent body should be created or nominated to administer space activities. This is to ensure no conflict of interest arises between state and non-governmental/private actors. A good example, and longstanding demand, is to split up the licensing and administrative duties of the Telecom Regulatory Authority of India.

Activities like satellite-based communications need inter-ministerial as well as inter-departmental inputs today. For example, the Wireless Planning Commission of the Department of Telecommunications plays a vital role in assigning frequencies for space-based communications. Therefore, a nodal agency comprising officials from the relevant ministries and departments, all of whom are stakeholders in the activity, will help move things along by being able to offer single-window clearances for licensing, promote better conditions for FDI and provide regulatory transparency.

So having an independent nodal agency will catalyse the formation of a space-based digital economy in the country. Today, new players in the space ecosystem such as Luxembourg have gone on to provide sovereign national funds as well as legal frameworks to private companies to capture potential business opportunities in space mining. While this may be debatable from an international obligations POV (referring to the Outer Space and Moon Treaties), they have created national legal frameworks to enable businesses to own material extracted in space.

It is true that we should respect international obligations as well as national security concerns – but that shouldn’t be at the cost of jeopardising the creation of a new digital economy.

Dealing with liability

Liabilities are very different for upstream activities – such as spacecraft operations and launch/in-orbit operations – against the use of space-based products/services on the ground, such as data security for remote sensing products, communication handsets, etc. However, the Bill uses a vague blanket to cover against liabilities and that is to be passed on to the actors.

This again recalls the need to have the Bill address specific activities within the value chain and assign liabilities that make sense to each of the activities instead of all at once. For example, the US assigns a necessary insurance ceiling cover that needs to be procured by commercial space transportation providers for launches in case any damages are sustained. Any damages that are above the ceiling will presumably be taken care of by the government. This is why the SpaceX Falcon 9 rocket reportedly requires $63 million in prelaunch liability coverage.

There are several established models for covering liability in international practices according to the kind of activity within the value chain (upstream/downstream). These can be employed and adjusted according to whatever resonates with the local, Indian ecosystem. Using a blanket without any details on the ceiling, however, will make it very difficult for both entrepreneurs as well as insurance providers to conduct any business.

Offenses and penalties

One areas of concern here is the ‘Punishment for causing damage or pollution to environment’.

Notwithstanding anything contained in any other law for the time being in force, any person who causes damage or pollution to the environment of the earth, airspace or outer space including celestial bodies by any space activity shall be punished with imprisonment …

Pollution to the environment of outer space including celestial bodies needs to be defined. It is not clear if this is in line with the space debris ‘code of conduct’, according to the Inter-Agency Debris Mitigation Committee guidelines, or other best practices in handling interplanetary missions. Instead, we could follow practices adopted by countries like France: by taking to legislative routes to mitigating pollution in outer space (via mitigation of space debris), but there is a need to state the details in the Bill.

In all, the draft Bill needs to consider breaking down space and ground activities to frame clearer laws for the conduct of business, international obligations, national security concerns and protection of IP. It will not do justice to the entrepreneurial community if this Bill is implemented as is. One of the exercises that can be conducted to align the Bill to enable a competitive ecosystem for commercial space in India is to conduct a review of international best practices in managing the space value chain and inducting them within the Bill.

The deadline to provide comments on the draft is December 21, 2017. Reach out to [email protected] to provide your comments.

This article was originally published on the NewSpace India blog and has been reproduced here in full with permission. The author, Narayan Prasad, is a NewSpace enthusiast.