Isro banks on private players as it plans series of satellite launches

After repeated successful satellite launches over the past five decades, the Indian Space Research Organisation has now set its sights on the next mission: to tap the growing international demand for products and services for outer space.

The Indian space agency wants to build on its growing reputation for low-cost yet effective satellite launching capabilities to become a key player in the global space arena. “Globally, the demand for small rockets is growing and we want to capture this market by offering cost effective solutions,” says K Sivan, director, Vikram Sarabhai Space Centre, Isro.

To boost its satellite launching credentials further, several big-bang activities are being planned by Isro over the next five years: among them are a repeat mission to the moon to deploy a rover and 60 satellite launches. Isro is also working on a smaller rocket that can be assembled in three days, effectively giving it the capability to launch satellites every week. Today, it takes around six weeks to assemble a rocket.

Yet given the scale of the opportunity globally and its own financial and manpower limitations — its 2017-18 budget is $1.4 billion as against Nasa’s $19.1 billion —Isro is not looking to go alone. “We need the help of industry players to achieve our goals. We are open to start-ups and smaller companies that meet our requirements,” says AS Kiran Kumar, chairman, ISRO.

The space agency is encouraging private players to form small consortiums to undertake satellite and rocket manufacturing work so that it can remain focused on research and development.

At least 500 private players, including Larson and Toubro, Godrej and Ananth Technologies, have been identified for this purpose. The advantages of roping in private players are easy to see for both the government and industry. Increasingly, space activity globally is being shaped by nimble private players rather than government sponsored space programmes. These players bring the twin advantage of speed and agility to a country’s space programme by focusing on specific solutions and delivering them in a time-bound manner.

For private players, on the other hand, there is a lot of business to be had. According to an estimate by global space researcher Euroconsult, over 6,200 small satellites (of less than 50 kgs) are expected to be launched by 2026, of which 70 per cent will be via commercial operators. The market value of these satellites is expected to triple to $30.1 billion in the next 10 years, from $8.9 billion over the previous decade.

Given the opportunities, private players are eager to join the space race. In India, 33 private firms are currently trying to build capabilities to launch small satellites, although not many have tasted success yet. So far, besides Isro, only Bengaluru-based start-up Bellatrix has the propulsion technology to carry satellites into outer space.

It (private-public partnership) is a great opportunity for India, and what we are trying to do is enable capacity building in the country,” Kumar told Business Standard. “Some of the things can happen at a significantly lower cost in India compared to others countries. So, private players can become part of the global supply chain as well.”

Isro has started the process to identify four to five private players who could undertake satellite manufacturing on its behalf, and expects to launch three or four satellites built by these players by next year. The space agency has also started to farm out the technology for its workhorse rocket, Polar Satellite Launch Vehicle, to private firms. The first such rocket manufactured outside Isro is expected to be launched in 2020-21. Isro has also floated a tender inviting private firms to build over 30 satellites, nearly half of its total requirement over the next five years. Of the 14 consortiums that have shown interest, three will be selected by February.

Besides catering to global markets, Isro believes there is sufficient demand for satellites within the country itself to make investments by private players in the sector a lucrative proposition. “Today, the volume is available. Over the next three-four years, India needs 60-70 satellites, besides replacing the existing ones that complete its life,” says M Annadurai, director of Isro Satellite Centre. In five years, he expects requirement for 18-20 satellites every year. This volume, he says, makes good business sense for private firms.

Some of the big vendors of Isro are indeed excited about this thrust on public-private participation. Shikha Gupta, general manager, Bharat Electronics, says, “Eco-system coupled with business visibility for industry will definitely increase growth in this sector. We are keen to work with Isro in both ground as well as onboard segments of satellites.”

Yet, the industry has some concerns about committing investments in the sector. “Space technology business requires huge spend in R&D coupled with low volume requirements. Periodic change/ upgrade in technology of various electronics systems have been a challenge in addressing the increasing demand for satellites,” says Gupta.

To ensure private players don’t end up burning their fingers, Sanjiv Shukla, executive director, Hindustan Aeronautics Ltd, says Isro could consider adopting what he calls the Sun Planet Satellite Supply chain model, in which one big company like HAL can be the main supplier (like the Sun) and other medium and small enterprises can revolve around it.

Small and medium companies are also worried about the complicated procedure currently in place at Isro for onboarding suppliers. A CEO of a medium enterprise who asked not to be named says even to take a sample from Isro, an enterprise currently needs to furnish a bank guarantee.

Suraj Rawal, fellow at Lockheed Martin, a global major that specialises in space technology, says while he is excited about the emerging opportunities in India, to what extent the doors have been opened for private companies is not clear. “We are not convinced as some companies are not optimistic. We are also not clear how the policy is supporting (private players),” says Rawal. His company is one of the major American defence suppliers and has signed an agreement with Tata Advanced Systems to manufacture F-16 fighter jets in India.

H S Shankar, chairman and managing director, Alpha Design Technologies, which leads the first private consortium for building satellites for Isro, says there is no room for errors once a firm signs up on a project for Isro. “If they do not follow procedures and an error is made, it can result in loss of crores of rupees,” he says. “So, if an enterprise is not able to go alone, it should join other companies and become part of a consortium.”