Last week, Lloyd’s of London launched a $25 million insurance facility for the private space industry. It will cover sub-300kg satellites from pre-launch to in-orbit operations. The insurer estimates the current private space market to be worth $300 billion and expects it to grow to $1 trillion by 2040. Neither Lloyd’s nor the City of London are strangers to underwriting exploration. Along with their Dutch and later American counterparts, over the past few centuries they helped shape the history and political geography of the modern world.

One important lesson from the story of exploration, colonial expansion and empire is that even small legal innovations can have profound consequences. The invention of the joint stock company and the ecosystem that arose to support it allowed the Dutch and British East India companies to take massive risks and reap unprecedented rewards for their shareholders and sovereigns. A similar business environment on the American continent helped the US grow into what it is today. The moral cost of colonialism is unconscionable. The inescapable point, though, is that societies that create conditions that allow private entrepreneurs to take big risks often end up as successful, prosperous ones. That is a lesson from history that is relevant to the space business today.

Luxembourg has followed the US in enacting a law that allows private investors to own the resources they bring back from space. Singapore is offering itself as a hub for space entrepreneurship based on its legal environment, availability of skilled manpower and equatorial location. New Zealand is positioning itself as a location for private rocket launches. China, too, has changed its rules to allow private commercial space activity. In July, Beijing Interstellar Glory Space Technology Ltd became the first private company (with Chinese characteristics, of course) to launch two satellites into space using its own Hyperbola-1 rocket from a facility in the Gobi desert.

The second space age has already started. If governments were the main players in the first one, private entrepreneurs are main protagonists in the second. India has its share of space entrepreneurs, but the regulatory environment remains wedded to the old paradigm of a government-run space programme and the private industry that it nourishes. Unlike most other industries dominated by public sector undertakings (PSUs), not only is the Indian Space Research Organisation (Isro) relatively more efficient, competent and competitive, it has also built a technology ecosystem of high-quality suppliers. While this allows India to take up exciting scientific missions, such as Chandrayaan, and participate in the heavy-lifting international business of putting satellites in orbit, it does little to unleash the energies and resources of the private sector. India finds itself in the second space age with one hand tied behind its back.

At a recent conference, it was felt that both India’s defence and emerging commercial business models require the capability to launch rapidly. The defence consideration is to be able to replace crucial space assets quickly should they be disabled by a hostile adversary. On the commercial front, the trend is towards constellations of nano- and cube-satellites, some as small as a club sandwich, which operate for a couple of years before de-orbiting and burning out. Both scenarios need rockets that are launched at short notice or frequently on a regular basis. While members of the space establishment felt that it would take time for us to achieve this, young entrepreneurs in the room claimed that their business plans could achieve it within a couple of years. While they were already designing the rocket, their problem was that the regulatory environment was hard to crack.

Now building and testing rockets is a hazardous business that involves procuring, storing and handling high explosives, testing high-energy flying objects, and so on. I’m sure these words can be used to scare bureaucrats and politicians into playing it safe and prohibiting a private launch industry. While the entrepreneurs and investors can take the next flight out into the welcoming arms of Singapore or Luxembourg, it is India’s national interest that will suffer. Similarly for satellites—if we cannot clear the decks for our entrepreneurs, they’ll just leave.

It is time for India to structurally separate the regulatory, commercial and scientific research elements of the space programme. We need an independent regulator that governs both Isro and new space operators on a level playing field. There are space activities that must be publicly funded, and there are other activities that can attract private investment.

India needs a new space policy—one that aims to harness space as a growth sector for the economy, attracts private investments and creates jobs, even as it promotes scientific breakthroughs and helps leapfrog developmental challenges.

The goal should be to gain a significant share of the $1 trillion global market that Lloyd’s projects just two decades ahead. Private investment in New Space is happening and will happen regardless of whether India changes the policy. It’s up to us to decide whether we want India to benefit from it or not.

Nitin Pai is co-founder and director of The Takshashila Institution, an independent centre for research and education in public policy

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