-
CENTRES
Progammes & Centres
Location
Image Source: Getty
A geoeconomic witticism that has been around for some time is that, ‘the United States innovates, China manufactures, and the European Union (EU) regulates.’ Recently, both American companies, Google and Meta have complained that the EU’s proposed Artificial Intelligence Act and the General Data Protection Regulation (GDPR) are stifling their innovation and product rollout in Europe. Excessive and premature regulations have affected Europe’s high-tech innovation capacities and are one of the reasons for growing concerns in trans-Atlantic economic relations. India has a lesson to learn as it seeks to become the third-largest economy amidst significant geopolitical changes. India cannot be merely a manufacturing power as China was for a long time; it must become an intellectual property power. For that to happen, it must carefully navigate the path of advancing and regulating scientific innovations and technologies.
Excessive and premature regulations have affected Europe’s high-tech innovation capacities and are one of the reasons for growing concerns in trans-Atlantic economic relations.
The Indian National Space Promotion and Authorization Centre (IN-SPACe), the new body within the Department of Space, announced an INR 1,000 crore startup Venture Capital Fund in October 2024 and an INR 500 crore Technology Development Fund in February 2025, both in quick succession. These announcements have sparked inquiries in hushed tones within closed governmental and non-governmental circles: Is it possible for a regulatory body like IN-SPACe to finance innovation? If so, how can one rule out the appearance of (if not actual) conflict of interest when a regulator must enforce regulations against a startup it has financed, compared to one it has not financed? IN-SPACe has yet to address this nuanced perception or misperception that is circulating.
In the Indian Space Policy 2023 (ISP, 2023) document, the government states that it will “Create a stable and predictable regulatory framework to provide a level playing field to Non-Government Entities in the Space sector through IN-SPACe.” The same document states that IN-SPACe will prescribe guidelines and regulations. The functions IN-SPACe discharges under ISP, 2023, and the Norms, Guidelines and Procedures for Implementation of ISP, 2023 in respect of Authorisation of Space Activities (NGP) have several key components of a regulator. IN-SPACe’s institutional model is creatively unique as it houses promotion, hand-holding, guiding, and authorising responsibility all under the same institutional roof.
Legal experts say that it usually takes an ‘Act of the Parliament’ to give a body the status of a regulator. Currently, IN-SPACe authorises space activities not through an order, circular, or notification but by entering into a contract with the private space enterprise. Thus, so long as the constitutional requirements applicable to the government entering into contracts are fulfilled, such an approach is not altogether incorrect. However, several questions are then unanswered—for example, would the contract in such a case be considered determinable or not? Will the penalties stipulated for breach of the authorisation be subject to the rigours of proving losses laid down under Sections 73 and 74 of the Indian Contract Act?
IN-SPACe authorises space activities not through an order, circular, or notification but by entering into a contract with the private space enterprise.
Besides the above precisionist but valid legal queries, the broader question is why the government is investing in the commercial space sector. Why now? Where is the foreign direct investment? Aren’t domestic institutional investors yet tuned to finance high-risk investments? Indeed, there are pressing challenges.
The Prime Minister’s Office (PMO), which oversees IN-SPACe, has been agile in foreseeing the economic turbulence developing in the global economy, the geopolitical and geoeconomic differences simmering within the collective West—a significant source of technology, trade, and capital for the Indian commercial space ecosystem—and the emerging international technopolitical multipolarity particularly taking the form of tariff wars, all of which are likely to be slowing cross-border investments worldwide. Additionally, overseas venture capital cannot be relied upon due to technopolitical complications, especially those linked to investors with suspicious beneficial ownership patterns.
India has privatised its space sector, but the sector’s strategic significance and linkages to the national space programme have not declined; rather, it has grown manifold. Therefore, this newly liberalised commercial space sector needs to be safeguarded and well-supported, making it essential for the government to sustain the nascent private space sector through domestic financing. The last 5-10 years have shown time and again that domestic private investors and banks are looking to get their investees technically validated by a capable and unbiased entity. IN-SPACe is that capable entity. Indian banks, both nationalised and private, are not fully equipped to evaluate the commercial return on investment from space innovations; IN-SPACe is that capable entity. To that end, the government’s wise decision to allocate INR 1,500 crores for the commercial space sector, taking the Alternate Investment Fund route, is a good start. The sector’s appetite will be much higher in the coming years, and the government should ensure that domestic investments maintain a healthy ratio against foreign investments.
India has privatised its space sector, but the sector’s strategic significance and linkages to the national space programme have not declined; rather, it has grown manifold.
What role IN-SPACe assumes in the future is entirely the government’s learned prerogative. However, Indian history offers lessons. For instance, attempts to regulate the biotechnology sector prematurely were made in 2008, 2011, and 2013 through the Biotechnology Regulatory Authority of India Bill, yet none made it to the finish line. An industry body, the Association of Biotechnology-led Enterprises, was established much earlier in 2003. However, it was never a play between the government as a regulator and industry working in tandem through bodies. Eventually, good sense prevailed, and the Department of Biotechnology successfully established a missing element, its funding support and promotion agency, known as the Biotechnology Industry Research Assistance Council (BIRAC), in 2012. BIRAC, today, is an important cog of the Indian bio-economy sector, pegged above US$ 150 billion, but it is not a regulator.
Similarly, the Cellular Operators Association of India, while not a funding support agency but rather a non-governmental organisation, predates the Telecom Regulatory Authority of India. It emerged after the announcement of the first city-level telecom licenses in the early 1990s. However, it was in 2014 that the Telecom Standards Development Society of India was established, which is now regarded as responsible for the innovation of indigenous 5Gi and 6G technologies—something that was not possible for India in the first four generations of telecommunication technologies. In this case, India’s telecom sector innovation and standardisation came much later than the regulation. Had it been established earlier, in the mid-2000s, India could have participated in the telecom generations, i.e. 3G and 4G. These and other examples demonstrate that advancing industry interests is often more effectively achieved through simultaneous early financing and facilitation along with regulations. Regulating without facilitating innovation is detrimental, and lessons from Europe should be a case study.
IN-SPACe should consider stating publicly the ‘separation of function’ that needs to be in its promotion and authorisation arms. Elucidating the separation of function is necessary to prevent making the government susceptible to avoidable complications from substantiated and unsubstantiated cases of conflict of interest. The DoS will certainly want to avoid going unprepared and inadvertently into a rabbit hole of geopolitically motivated ‘lawfare’—a portmanteau of law and warfare. The last international ‘lawfare attack’ it faced was on its public enterprise, Antrix, which it could have avoided.
Elucidating the separation of function is necessary to prevent making the government susceptible to avoidable complications from substantiated and unsubstantiated cases of conflict of interest.
IN-SPACe will undoubtedly play a crucial role in expanding the regulatory frameworks for the commercial space sector, particularly in areas such as commercial human spaceflight, extraterrestrial activities, resource extraction and utilisation, and sustainable, internationally compliant orbital operations. Such expanded regulatory frameworks will develop by integrating inputs not only from the PMO but also from various ministries, especially those involved in one or more Cabinet Committees. IN-SPACe can set a benchmark for facilitators in other innovation sectors and other government science and technology industries. A good model will also serve well the privatisation of another strategic sector, the commercial nuclear sector, which has already commenced in the country. IN-SPACe is a unique and effective operating sandbox that agencies, the private sector, and policy and law firms are closely observing. It better articulates its ‘separation of function’ well, supports innovation wholeheartedly, ensures authorisation meticulously, does not over-regulate like the Europeans and stays clear from lawfare attacks.
Chaitanya Giri is a Fellow with the Centre for Security, Strategy and Technology at the Observer Research Foundation
The views expressed above belong to the author(s). ORF research and analyses now available on Telegram! Click here to access our curated content — blogs, longforms and interviews.
Dr. Chaitanya Giri is a Fellow at ORF’s Centre for Security, Strategy and Technology. His work focuses on India’s space ecosystem and its interlinkages with ...
Read More +
PREV
