indianotes

The most newsworthy event last week (apart from the World Cup) was the success of Skyroot’s orbital rocket and satellite launches. India is now only the third country where a private company can put satellites into orbit.

Not only is this incredible, it seems almost unbelievable. In a world where India lags far behind in crucial technologies like rare earths, electric vehicles, batteries, semiconductors, AI, robotics, etc. – this achievement stands out as a rare example of “deep-tech” success.

And Skyroot is only the tip of the iceberg. Others like Agnikul Cosmos, Pixxel, Digantara, Bellatrix, Dhruva, Satsure are all making waves. India now has more than 400 space start-ups. Think about that for a while – four hundred!

This begs the questions, why and how. Is this an accident, or by design?

A decade ago, ISRO did everything – from R&D to building rockets and satellites, to launching them and selling the payloads. Private companies were restricted to component supply.

One organisation was the researcher, manufacturer, infrastructure developer, operator, regulator and seller of services. Despite being one of the most successful R&D driven PSUs in India, ISRO was forced to do things like selling, dealing with lawyers, and manufacturing – which were outside its core competence. This structure inhibited the scale and speed that was needed.

Starting 2020, the government took a series of reform measures to create a new institutional architecture. This structure separated responsibilities based on comparative advantage. Two new institutions were created – the Indian National Space Promotion and Authorization Centre (IN-SPACe) and New Space India Limited (NSIL).

IN-SPACe is a combination of regulator, incubator and facilitator. They interface with the private sector, evaluate feasibility and ideas; facilitate access to ISRO’s technology and infrastructure; and enable seed funding.

NSIL works on monetization of mature technologies, and sells satellite capacity, launch services, data, and other by-products.

ISRO now focuses on frontier R&D, critical infrastructure, and national missions. ISRO also plays a pivotal role in hand-holding start-ups, sharing technology, people, labs and costly infrastructure. In fact, they are the fulcrum around which this ecosystem has been built.

Finally, the private sector works on innovation and scaling of the technologies, building satellites and rockets; developing data applications based on ISRO tech, and so on.

The success of this institutional architecture is now clearly visible.

Institutional reform of this nature is extremely hard to do in India. Reports suggest that Prime Minister Modi personally pushed these changes. Also instrumental were ISRO chairmen, Dr. Somanath and Dr. Sivan, and the entire team at ISRO, who had to rethink their role, share IP and hand-hold private companies.

Interestingly, private sector involvement was part of the design. The first Chairman of IN-SPACe was Mr. Pawan Goenka, ex-MD of Mahindra & Mahindra. He brought in perspectives of industry, manufacturing, financing and commercialization. IN-SPACe has become not just another regulator, but a powerful enabler.

As we’ve seen, this collaborative approach has been transformational. This is one of the most successful examples of redesigned institutional architecture that brings together government, regulators, public and private sector. And it’s not just about a few isolated successes, we’ve actually created a vibrant “ecosystem” for the space sector.

While such models are rare in India, the US has similar templates. Elon Musk’s SpaceX would not exist without NASA. DARPA helped create the Internet and GPS; and have backed numerous defence startups. NIH research has underpinned the success of biotech giants like Moderna and Genentech.

The real lesson is not about rockets. Indian government funded labs and educational institutions spend billions on R&D, which doesn’t get to market. Our research labs and entrepreneurs have struggled to work together. Conflicting priorities (science vs profit) and a highly constraining bureaucratic system have created a friction that’s hard to overcome.

But the government, ISRO and space start-ups have now demonstrated a successful template for public-private collaboration and commercialization of cutting-edge technology. We need to replicate this across the economy.