Expert Speak Space Tracker
Published on Apr 19, 2019
The Space Activities bill- Does it deliver?

Understanding the legal context of the Space Activities Bill

The organisational hierarchy for India’s space program remains unique, reflecting the government’s sense of priority for India’s space ambitions. By virtue of the allocation of business rules, the office of none other than the Prime Minister, through the Department of Space, remains at the top of the organisational hierarchy. Within these organisational structure, numerous policies such as SATCOM Policy, SATCOM Norms, Remote Sensing Data Policy and Technology Transfer policy were formulated. Lacking the means to impose sanctions on those who flout, the status of these policies as a law is debateable. The structure of this hierarchy and the allocation of business rules suggest a deliberate effort on the part of the Indian state to refrain from over regulating the sector, a laudable effort, supported by precedents in other industries where absence of regulation unleashed innovation.

However, in the world of globalisation, experiences with international liability have necessitated the need to reflect on the wisdom of deregulation. As was demonstrated in the Devas case, the liability that India suffered in the arbitration was the product of a BIT enforcement action in International Arbitration, based on the allegation that the allocation and cancellation of Indian state resources to Devas was arbitrary. Absence of well-defined policies often lends credence to allegations of arbitrariness and can be as counter-productive to the state as it is to the industry. From the perspective of the industry, while there is little to complain, considering how ISRO and Antrix have supported space tech start-ups in the country, the challenges space tech start-ups have faced in attracting investments reflects investor caution and some would argue, poor investor sentiment. While this is true to any industry that is novel and unprecedented, the right policy around the sector can mitigate the crisis created by poor investor sentiment and thus help emerging start-ups. A policy statement that is clear and qualifies as law can improve predictability of investment transactions, estimate the cost of investment transactions, facilitate the flow of international capital thus assuring returns on investments and enable investors to accurately gauge their rights and provide mechanisms for enforcing investment obligations.

Reviewing the Space Activities Bill

The question therefore is simply this- Does the space activities bill provide to the state and to the industry, the missing links necessary to mitigate international liability and improve investor sentiment respectively? The Space Activities Bill gets many things right- it reflects India’s international obligations so far as space activities are concerned, it provides a mechanism for enforcing those obligations by defining offences to address transgressions in space and provides for appropriate punishment for the same. A combined reading of Section 3 and Section 5 suggests that, though per se, they do not provide the clarity on the critical question of who will be eligible to be the licensed operator of space activities and what barriers of entry such space aspirants will face, as the question of timelines for granting of licenses and the licensing fee. However, the very fact that the law requires the government to evolve such mechanism, by itself, reflects the intention of the state to set up a transparent and clear procedure for licensing the right to conduct business activities in or in relation to space.

Section 7 (2) of the bill stipulates limited grounds for refusing an application for a license, with the intention of ensuring licensees don’t jeopardise public health, remain compliant with international obligations and do not adversely prejudice national interests. Since these are the only disqualifying criterion prescribed within the draft legislation itself, it would be reasonable to expect the Indian state to promote and advance the cause of space tech start-ups in the country by ensuring low barriers of entry. To give further credit to the bill, it also illustrates the terms and conditions of such license under Section 8, thus providing already, a semblance of clarity and predictability of what space tech businesses must undertake to ensure they are able to conduct business in or in relation to space.

While the practicality of investigating, prosecuting and establishing the offences laid down in the bill is debateable, the process of such criminal law sanctions are an inevitable character of a domestic space law, as it gives the state the basis to enforce international and domestic space law obligations upon the private sector. Notwithstanding the utility of the offences stipulated in Chapter V of the bill, the Indian state will have to develop the capacity, infrastructure and the expertise necessary to enforce it. However, space tech businesses must be mindful of the penalties prescribed and accordingly invest in suitable safety measures and quality control processes.

The way forward

The Bill will still have to be approved by both houses of the Indian Parliament before it assumes the character of an enforceable legislation. Even past that process, what the industry must closely monitor is the mechanisms for licensing and regulating private sector activities in or in relation to space, that the Government will have to evolve in terms of Section 3 and 5 of the Bill. Those mechanisms based on the law, will not only have a more significant and measurable impact on the industry, but it will also enable state agencies to engage the private sector in a manner consistent with international investment laws.  Coupled with the establishment of a special purpose vehicle, India appears to be serious about ensuring flow of technology from the state sponsored space program to the private sector. Two state driven enterprises Antrix and NewSpace India Ltd., dedicated to the cause of taking the state space program to the private sector, reveals a positive statement in favour of the industry. The potential for these two agencies to compete with each other to drive the cause of unleashing a domestic space economy for the private sector, can result in more reforms and progress than a policy can achieve. At the very least, the setting up of these two agencies provides a framework for interpreting the vision and specific provisions of the space activities bill.

The Government of India has truly delivered on its promises improving the factors for enabling ease of doing business in space. Antrix and ISRO, despite the lack of a clear pro private sector policy, have forged excellent relationships with new space companies, providing space entrepreneurs, both the platform and the support necessary to set up sustainable businesses in the country. The Space Activities Bill can augment that support and encouragement and greatly improve investor sentiment in the Indian space sector. If the setting up of the Special Purpose Vehicle is anything to go by, the Indian space tech businesses have much to celebrate and to hope for, for the Government is clearly inclined to unleash the private sector initiatives in space.

This article originally appeared in Space Alert.
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