Liberalization of the Indian Space Sector: Private Participation and Legal Challenges

Rongeet Poddar*

Keywords:      Authorization – Draft Space Activities Bill, 2017 – IN-SPACe – Outer Space Treaty – Supervision


The Indian government is keen to ramp up private sector participation in space activities, following affirmation from the Union Cabinet. The principal science advisor of the Indian government has recently underlined the intention to have greater involvement from private players, acknowledging the Indian Space Research Organization’s (ISRO) limited capacity. While ISRO has historically played a pivotal role towards advancing India’s space programme, the private sector was restricted to a collaborative role in the manufacturing sphere.

Private players are now expected to actively engage in launching satellites and offering myriad services that would facilitate various domains such as agriculture by enhanced accuracy in climate patterns, increase connectivity capacity and offer an impetus for businesses in the long run. Moreover, the exploration of private avenues is likely to allow the premier government space agency to devote its attention solely to specialized research programmes. The government has also created leeway for a foreign investment stimulus – 100% foreign direct investment has been permitted in the sphere of satellite operation. It is expected that such liberalization would further augment India’s burgeoning capacity in the space activities domain.

From a legal standpoint, the challenge before policymakers has been to strike a balance between offering a fillip to privatization in the space sector and also having a concrete regulatory framework in place. Laws must be designed not only to ensure compliance to international treaties but must also mirror global best practices. Since commercial entities will be keen to maximize profits to recoup the substantial investments that space projects demand, it is imperative that compliance costs are minimized. Therefore, the legal architecture regulating space activities is also expected to be amenable to business interests.

Recent privatization trends in the space sector

The Indian National Space Promotion and Authorization Centre (‘IN-SPACe)has also been set up to enable private enterprises to utilize government infrastructure for conducting satellite launches and providing a myriad range of services in the process. As an autonomous institution functioning under the aegis of the Department of Space, the IN-SPACe has also been entrusted with regulating the involvement of private entities. Recently, two Indian enterprises have received the green signal from IN-SPACe for their respective payload launches.

At the same time, the Draft Space Activities Bill, 2017 (‘Draft Bill’) had been envisaged, owing to the pressing need for having a domestic space law. Despite the advent of IN-SPACe as a regulatory institution, there has not been sufficient progress in the legislative sphere. Interestingly, even as the present dispensation in India appears to be more receptive to the prospect of private sector engagement in outer space activities, the legal regime appears to be at a nascent stage.

As acknowledged in the ‘explanatory note’ to the Draft Bill, the government is cognizant of the fact that if space exploration has to be pursued on a commercial scale, a licensing framework has to be established for authorizing private forays into space. In fact, a robust national space law is seen as the ideal precursor to private participation. It can provide investors a sense of certainty as they seek to leverage funding for satellite operations.

While IN-SPACe maybe the genesis of a private space activity ecosystem, it has to be backed by a concrete space law, as is the case in advanced space-faring nations of the West. The overarching tendency towards privatization in the explanatory note has been flagged since it places commercial use of space at a higher pedestal over India’s treaty commitments; this approach is viewed as a slippery slope. Even though the Draft Bill is regarded as a welcome move, the inadequacies remain far too intractable to overlook.

International commitments

Being a party to all major international treaties governing outer space, barring the Moon Agreement, India is obligated to adhere to treaty obligations. It must be noted that Article VI of the historic Treaty on Principles Governing the Activities of States in the Exploration and Use of Outer Space, including the Moon and Other Celestial Bodies, 1967 (‘Outer Space Treaty’) puts the onus on state parties to bear responsibility for “national activities in outer space.” A mandate has been imposed on states to create an apparatus for supervision. Secondly, Article VII of the Outer Space Treaty attributes liability to state parties for damage caused by space objects launched from their territory. Thus, the accountability for private space activities has effectively been thrust on state parties.

International efforts, spearheaded by the International Law Association, for pinpointing a set of uniform global regulation standards also culminated in a model law adopted by the United Nations Committee on Peaceful Uses of Outer Space. Under the model, national legislation proposed, private sector participation in space activities would be subject to a strict standard of scrutiny undertaken by states domestically based on ‘authorization’ and ‘supervision.’ Its regulatory design is backed up by sanctions regime under which authorization suspension is rendered permissible.

Additionally, a provision has been incorporated for environmental impact assessment of private space activities. The model law necessitates the adoption of a debris mitigation framework. There is also an avenue for the government to pursue claims against a private entity in the event where compensation has to be paid by the state to a third party for the damage caused by the private space actor. Even as the Draft Bill in India claims to have utilized the ILA model law as a blueprint, there are several pitfalls in the proposed law which have been highlighted in recent scholarly works.

Scrutinizing the Draft Space Activities Bill, 2017

The applicability of the Draft Bill is restricted to enterprises in the private sector which are registered or incorporated in India. The bill does not provide clarity as to what will happen if foreign firms seek to participate in the Indian space sector in a collaborative capacity with the private sector. Joint ventures undertaken by Indian firms with foreign investors could be operating in a legal vacuum. Moreover, it may be an uphill task to determine a space object of ‘Indian origin’ to which the proposed legislation would be applicable – the Draft Bill is silent on the critical question.

The definition of ‘space activity’ in the Draft Bill is further shrouded in ambiguity. Its residuary segment potentially brings in research or allied activities within the fold of space activity. The wide ambit of the definition is also likely to cover the manufacturing sector as it is inclusive of space objects ‘procurement’. The expansive nature of the clause appears to transcend the understanding of space activity in the ILA model law which encompasses “other activities essential for the launch, operation, guidance and entry of space objects.”

The power of supervision and regulation have been conferred upon the Central Government. In addition to policy making pertaining to outer space activities, the government can issue licenses for commercial space activity and also monitor compliance with safety standards prescribed. Since the Draft Bill had identified the need for a ‘regulatory mechanism’, it is evident that IN-SPACe is the concerned agency that will play the role of an autonomous agency with regulatory functions.

As outlined in Chapter III of the bill, the license issued by the government is a sine qua non for commercial space activity – its object is to ensure compliance to India’s treaty commitments. Interestingly, leeway has been provided for conduct of space activity in the Draft Bill even without authorization as long as it does not contravene India’s international obligations. The Central government has been designated as the sole authority which can provide such an exemption, subject to parliamentary scrutiny. However, this provision may be singled out for criticism as it could be prone to misuse. Since, the Bill is silent about the terms of exemption, it could provide untrammelled impunity to operators of space activity in the private sector. Thus, there is an urgent need to rethink the exemption clause.

While the licensing terms in the Draft Bill have a ubiquitous reference to preventing “adverse damage or pollution to the environment,” it does not insist upon a comprehensive environmental impact assessment for space activities based on precautionary principle. It remains to be seen whether the lacuna in the draft is addressed in the near future. On the other hand, the Central government’s blanket ownership right on “intellectual property right developed, generated or created onboard a space object in outer space” is further likely to hinder private sector engagement. Likewise, the incorporation of an access and benefits sharing clause as a part of the regulatory mechanism is also likely to be a cause for concern. Lastly, scholars have highlighted how several aspects of commercial activity in outer space such as resource extraction or tourism have been ignored in the Draft Bill.


Despite its shortcomings, the Draft Space Activities Bill, 2017 was a welcome move. It underscored the government’s tacit recognition that the space sector needs regulatory intervention before the private sector transitions to prominent stakeholders from marginal players restricted to manufacturing activities. In its current form, the Draft Bill has several contentious provisions, as identified, and remains a work in progress. There is scope for further engagement with the critical stakeholders for the creases to be ironed out.

With the IN-SPACe already instituted as a facilitator for stimulating private investment and participation in space activities, the government remains keen for governing non-governmental engagement in the space sector. It must also remain cognizant of fulfilling India’s international obligations in this regard. Besides adhering to the mandate of international treaties, the new law has the enviable task of ushering in a regulatory environment that is responsive to the demands of investors who seek to offer a boost to India’s space sector. At the same time, environmental concerns and public safety issues cannot be relegated to the margins.

* LL.M. graduate with International Law specialization.