The Indian space sector is witnessing a surge in private sector involvement. With the successful launch of India’s first privately developed rocket, Vikram-S, by Skyroot Aerospace and notable recent investments in Indian space startups like Pixxel, Digantara and Agnikul Cosmos, there is a growing anticipation of increased participation from private space ventures in India.
This is a dynamic shift given that historically, private entities have been involved in the Indian space sector based on an outsourcing model, where the government, by way of sub-contractual agreements, outsourced manufacturing and supply activities to private sector entities for components to be used by the government in their space activities. As a result, in India, private players were primarily limited to acting as vendors or suppliers for the government’s space program.
However, recent legal developments indicate that the intention of the Indian Government (“GOI”) is to shift away from this outsourcing model. These legal developments when aligned with the existing organizational framework of the Indian space program (as detailed below), aim to foster a more inclusive approach for enhancing private sector participation and attracting increased foreign direct investments into the sector.
Organizational Framework of the Indian Space Program
Source: ISRO2
1 Organizational Structure, ISRO, https://www.isro.gov.in/organisation.html
Source: ISRO1
For a few decades, India has been attempting to diminish government monopoly over space with a view to encourage private sector involvement. The aim appears to be acceleration of technological advancement and unlocking of new commercial opportunities with significant cost reduction. However, the absence of a comprehensive legal framework has been hindering the growth of the industry. To address this, ISRO introduced the Draft Space Activities Bill, 20173 (“Space Activities Bill”/ “Bill”) in November 2017. This Bill, aligned with the Model Law on National Space Legislation4, intends to regulate India’s space activities and facilitate increased participation of Non-Government Entities (“NGEs”). The Bill includes licensing requirement, registration of space objects, liability provisions, penalties for space pollution and protection of intellectual property rights.
This was followed by the release of Indian Space Policy, 2023 (“Space Policy”) on April 20, 20235, which defined and streamlined the roles and responsibilities of various stakeholders in the Indian space domain to encourage participation of NGEs. The stakeholders dealt with under the Space Policy are NGEs, ISRO, IN-SPACe, NSIL and DOS.
Although, GOI has to be applauded for initiating a clear vision on the future of domestic legal framework of Indian space law, it may lack concrete legal backing. Effective implementation will require appropriate legislation with clear rules and regulations. As a signatory to international space treaties6 and with increased private sector participation, domestic legislation must align with these treaties and accommodate the needs of private sector participants.
A few issues to be considered for the legislation are:
2 DOS centers/units, ISRO, https://www.isro.gov.in/isro_centre.html
3
Draft Space Activities Bill, 2017,
4 Model Law on National Space Legislation was formulated by the International Law Association to the UN Committee on Peaceful Uses of Outer Space in 2013. For more details please refer https://www.isro.gov.in/media_isro/pdf/Publications/Vispdf/Pdf2017/seeking_comments_on_draft_space_activities_bill201710.pdf
5 Indian Space Policy, 2023, https://www.isro.gov.in/media_isro/pdf/IndianSpacePolicy2023.pdf
6 Following are the space treaties that India is a signatory to: (i) Outer Space Treaty was signed by India in 1967 and completely ratified in 1982; (iii) The Agreement on the Rescue of Astronauts, the Return of Astronauts, and the Return of Objects Launched into Outer Space 1968 was ratified In India in 1979; (iv) Convention on International Liability for Damage Caused by Space Objects 1972; (v) Agreement Governing the Activities of States on the Moon and Other Celestial Bodies 1979 was signed by India; and (vi) Convention on Registration of Objects Launched into Outer Space 1975 which was signed in 1982.
(i) Liability and Insurance:
The Treaty on Principles Governing the Activities of states in the Exploration and Use of Outer Space along with the Moon and Other Celestial Bodies 1967 (“Outer Space Treaty”) places international responsibility on states for activities conducted by government and NGEs, making the GOI responsible for all NGEs activities in space. However, the Space Activities Bill proposes to hold NGEs accountable for damages, with the central government determining liability and requiring insurance coverage.
Unlimited, strict and/or absolute liability can discourage NGEs from participating in space activities. To address this, third-party liabilities can be approached in one or more of the following three ways: (i) capping the liability, (ii) waiving it in special circumstances (such as national or public welfare), and (iii) sharing it between the government and NGEs.
Many spacefaring nations, such as the United States, Australia, and France, have adopted similar approaches. They either cap insurance amounts for space-related liabilities7 or share liability if the liability amount exceeds insured amount8 or offer a complete waiver of liability if the space operation serves government interests9.
(ii) Intellectual Property Rights (IPR):
The Space Activities Bill proposes that any property developed on board a space object (while such object is in outer space) will be deemed to be the property of GOI. Further, the Outer Space Treaty prohibits appropriation of space and promotes exploration for the benefit of all humanity which could be viewed as contrary to the fundamental tenet of exclusive or personal rights under IP laws.
A clear stance on IPR in space is essential to avoid discouraging NGEs from participating due to uncertain entitlement to IPR.
(iii) Dual Use of Space Technologies:
Space technologies can be used for both military and civil purposes. India promotes peaceful use of space technologies while also developing its military capabilities, such as launch of anti-satellite missiles which can destroy satellites in space. Consequently, domestic legislation should consider restrictions on those space technologies that have either exclusively military applications or dual applications.
(iv) Foreign Direct Investment (FDI) in space sector:
To attract both domestic and global business into the Indian space sector, GOI should strongly consider allowing FDI in the sector.
Presently 100% investment in satellite establishment and operations is permitted via the government route.10 Whereas for manufacture of spacecraft and launch vehicles, satellites, planetary probes, orbital stations, being categorized as a defense-related activity,11 FDI of up to 74% is permitted through the automatic route, and any FDI beyond 74% is under the approval route, especially when such an investment is likely to result in access to modern technology or for other recorded reasons.12
The requirement of FDI approval can be a lengthy process. Therefore, a new FDI policy that is pending implementation13, is expected to liberalize the space sector. However, national security concerns may limit this liberalization to specific areas, like manufacturing, launch vehicle operation etc.
Privatization of space is a dynamic and evolving matter which presents numerous legal challenges. To tackle these challenges, a robust legal framework is required, and with a responsible and sustainable approach towards privatization which ensures national security and adherence to international obligations, India can set a pioneering example for other nations and propel its space program to greater heights.
7 In America under the Commercial Space Launch Act, 1984 insurance amount for liabilities arising out of space operations has been capped. For more details please refer Section 50914 of Commercial Space Launch Act, 1984, https://uscode.house.gov/view.xhtml?path=/prelim@title51/subtitle5/chapter509&edition=prelim
8 Under Australia’s Space Activities Act, 1998 the liable NGE is not required to pay any amount exceeding the insurance amount. Such excess amount shall be paid by the Australian Government. For more details please refer Section 69 (4) of Space Activities Act, 1998, https://www.legislation.gov.au/Details/C2004C01013#:~:text=to%20establish%20a%20system%20for,Australian%20nationals%20outside%20Australia%3B%20and&text=to%20provide%20for%20the%20payment,regulated%20by%20this%20Act%3B%20and
9 In France, if any space operation targets government interest then there is a complete waiver of liability. For more details please refer Article 14 of LOI no 2008-518 du 3 juin 2008 relative aux opérations spatiales https://download.esa.int/docs/ECSL/France.pdf
10 Clause 5.2.12 of Consolidated FDI Policy, Department for Promotion of Industry and Internal Trade Ministry of Commerce and Industry Government of India, https://dpiit.gov.in/sites/default/files/FDI-PolicyCircular-2020-29October2020_0.pdf
Contributed by Ms. Rishika Raghuwanshi, Associate
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Arvind Ramesh
Partner
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arvindramesh@vritti.law
Rishika Raghuwanshi
Associate
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