Space economy in India

The dawn of the space economy in India

EY
EY India

Multidisciplinary professional services organization

3 minute read 04 Nov 2022
Related topics
Aerospace and defense
Telecommunications
Technology

The space economy in India is set to grow to US$13b by 2025 at a CAGR of 6%.

In brief

  • Space-based communication will be one of the primary mechanisms to narrow the digital divide in India.
  • Satellite services and application segment would form the largest share of the space economy, accounting for 36% of the total revenue by 2025.
  • Opening up of the space economy to private participation in India heralds an era of growth and innovation. 

India has a well-developed space program, boosted by the realization of indigenous technology, facilities, systems, and rollout of services in a systematic manner. The opening-up of the space economy to private participation has the potential to bridge the digital divide, usher in innovative spaced-based services and catapult India to the forefront of spacetech race.

Indian space economy — set for accelerated growth

The satellite services and application market in India will be driven by greater demand for high bandwidth and lower latency data requirements, connect the unconnected with voice and data communication services and increase in IoT and autonomous systems. In addition, an increase in demand for military and defense satellite communication solutions is likely to spur the market forward. From an end-user industry perspective, media and entertainment may account for 26% of the total services market by 2025, followed by retail and enterprise at 21% and defense at 20%. The remote sensing segment may register one of the highest CAGR through 2025, driven by an increase in resolution of commercially available imagery and adoption of new-age technologies.

For satellite manufacturing, “Make in India” initiative mayspur growth owing to increased demand for small satellites. By 2025, the satellite manufacturing segment will be the 2nd fastest growing in the Indian space economy. Setting-up space parks across the country is likely to give a fillip to companies operating across the space value chain, especially manufacturing. It will be key to attracting global startups working in the space sector and help to incubate spacetech companies in India. 

Several companies are utilizing cutting-edge technologies to develop innovative launch solutions in India. They have built considerable expertise around the launch of Low Earth Orbit (LEO), Medium Earth Orbit (MEO) and Geosynchronous Equatorial Orbit (GEO) satellites and orbit management solutions. The launch segment is fast becoming a key focus area for startups and small and medium businesses (SMEs) in India to drive the innovation agenda and to make use of new revenue opportunities.

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Number of spacetech startups in India is on the rise

 

Currently, India boasts of over 100 spacetech startups. The year 2021 was a watershed year for spacetech startups, with investments reaching US$68m, a y-o-y increase of 196%. There were a total of 47 new spacetech startups established in India in 2021. Key drivers for investment in the Indian space segment are:

  • The government’s push for inclusion of private players in the space segment
  • Lower costs for developing and launching satellites
  • Promise of substantial Return on Investment (RoI)
  • Increased market demand for geospatial data
  • Technological advancement in the space industry

Focus areas

Key considerations

Regulation/ policy
  • A single window approval process through a nodal body focused on space economy shall aid and ease the process of having in place requisite authorizations to enhance ease of doing business
  • A comprehensive space policy covering upstream and downstream activities will help formulate vision and provide policy predictability to bolster investment climate

Satellite manufacturing
  • Introduce Production Linked Incentive (PLI) scheme for satellite manufacturing, like mobile handsets and telecom equipment

Launch vehicles
  • Promote independent launch solutions of Indian private companies for satellites and other spacecrafts

Access to capital
  • Facilitate access to cost effective and early stage capital for startups
  • Need for holistic skills development — competency of systems engineering, training on how to operate satellites skillfully, and technology associated with special alloy for launch vehicles

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Summary

By connecting the unconnected, space-based communication will be one of the primary mechanisms to narrow the digital divide in India. Satellite connectivity is key to enhancing digital inclusion by opening-up access to the online world. The opening up of the space economy to private participation across all phases of activities heralds an era of growth, innovation, and accelerated investment in the sector.

About this article

EY
EY India
Multidisciplinary professional services organization
Related topics
Aerospace and defense
Telecommunications
Technology

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