India’s draft Space Activities Bill if ignored may kill its private industry aspirations

India has been performing space activities for over 50 years now. Led by the Indian Space Research Organisation (ISRO), we have acquired the ability to build satellites, launch vehicles, ground control to serve the people of India with space-based services. Space is acting as an enabler today to provide several services such Direct-To-Home (DTH) broadcasting, VSAT for bank ATM machines, weather services, disaster management (search and rescue), navigation services, imagery based Geographical Information Systems (GIS) products among others.

In 2015, Prime Minister Narendra Modi addressed a national meet of top officials of different Ministries and State Governments on use of space applications in daily governance that included 1500 delegates mainly being Secretaries of Central Ministries/ Departments. The meet was to assess the current utilisation of space technology-based tools in their Ministry/ Department and explore new potential application areas. These have potentially led to the increased demand for space-based services with a roadmap to have over 60 satellites launched in the next 5 years and needing 60 rockets to do so.

 

The rise of private sector participation in space in India

ISRO being mainly a research and development focused organisation has created the technological foundation of the rockets, satellites and ground usage. However, to realise such a large number of large space systems, private partnerships have now been sought. A Public-Private Partnership (PPP) models are now being sought in the country to realise the ISRO’s workhorse rocket the Polar Satellite Launch Vehicle (PSLV) with a Joint Venture between ISRO and the private sector. While the first rocket by the PPP may be slated for 2020-2021 for launch, ISRO has invited the private sector to also build satellites with a tender to build 30 satellites. These are excellent developments which will allow the private sector in India to move towards gaining expertise in building complete systems and eventually help them even market it globally. It will also solve the capacity problems for ISRO meeting the demand and also spend its resources in creating next-generation technologies and applications. A win-win for both the taxpayer and the private sector.

We are also today witnessing a rise of NewSpace in India with start-ups such as Team Indus, Bellatrix Aerospace, Astrome Technologies who are planning their own space-based products/services. The difference between these companies and the 500 industries that have traditionally worked with ISRO is that they are generating their own IP for an independent product/service (such as satellite-based broadband) without ISRO either being their sole or largest customer or providing them IP and ensuring buy-backs (which was how most suppliers in the Indian space ecosystem were born over the last three decades).

 

Laws of the final frontier

Space is not the Wild West. In fact, India was one of the major contributors to the Outer Space Treaty which was put in place by the United Nations ensured States acted in good faith in using space for peaceful purposes and laid down ‘Principles Governing the Activities of States in the Exploration and Use of Outer Space, including the Moon and Other Celestial Bodies’. While India is a party to the Outer Space Treaty where one of the fundamental requirements laid upon States is the supervision of space activities within its borders, the country did not have any formally legislated laws. One could say that since the Government of India with its Department of Space (DoS) acting on its behalf created all the necessary infrastructure for space-based services, this was not a major necessity.

However, a couple of decades ago the private sector started showing interest in satellite-based services with entrepreneur Subhas Chandra led Essel Group’s Agrani Satellite Services Limited applying for a license to operate a geostationary satellite and provide services in India. This led to DoS putting in place a SatCom Policy in the year 2000 with a framework to provide licenses to private sector players to operate communication satellites over India. The Agrani venture fell apart after the satellite project ran into export licence issues under US munitions restrictions imposed after India’s nuclear explosions. The DoS has not issued any license hereafter to any private sector actor. Similarly, to administer the usage of remote sensing data products the Remote Sensing Data Policy (RSDP) was put in place as a balancing act of promoting GIS products for commercial applications as well as making sure that the national security concerns based on the resolution, location and the actors.

Apart from these two (non-legislated) policies, there has been no formal laws in the country that provided any framework for creating a private space venture so far. Some of the voids that can possibly have led to the lack of independent participation of the private sector in space may include lack of frameworks to provide transparency/timeline on licensing, issuance of authorisation & continuous supervision mechanism (in accordance to the Outer Space Treaty), matters related to insurance, management of space frequencies, taxation code for trade of satellites, indemnification and dispute resolution among others. These issues need to be addressed today to provide thrust for Make in India, Foreign Direct Investment (FDI) in space.

 

The foundation of the ‘Space Activities 2017’ bill

The larger participation of private sector and start-ups in the space sector in India has today led to a draft ‘Space Activities 2017’ bill released by Department of Space whose main object of the bill seems to be the governance of ‘Commercial Space Activities’. Here are some thoughts on a chapter-to-chapter reading of the bill.

Defining ‘space activity’

The definition of ‘space activity’ as mentioned in Chapter 1 affects the scope of the entities that will come under the ambit of the Act. The definition says

‘“space activity” means the launch of any space object, use of space object, operation, guidance and entry of space object into and from outer space and all functions for performing the said activities including the procurement of the objects for the said purposes.’

The use of a space object puts every space-based application into the gambit of the Act. Satellites are now used in a broad range of communications, imaging and navigation applications whose services on the ground. The term ‘use of space object’ literally puts in every piece of hardware that carries a GPS/GNSS receiver (e.g. smartphone, sports gear, computers, tablets, child/pet tracker, etc.) into the ambit of the Act. No one in the downstream industry or the upstream industry will benefit in case licenses are needed for them to even use a GPS/GNSS chip tomorrow in their product. Similarly, internet companies that use locational services within their operations may now be called to be performing ‘space activity’, since they are using space object (GPS) provided locational services to provide their services. This might then affect services of companies that provide ride hailing services (Ola, Uber, etc.), navigational services providers (Google maps, Here Maps, etc.), banking services and many more that today use locational services based on GPS/GNSS satellites.

It makes more sense to break down the Act into multiple sections that will address specific parts of the value chain. Division of the upstream and downstream and further breakdown to the activities within upstream and downstream will allow legislators to provide a solid foundation to products/services developed by the non-governmental and private sector within the value chain.

For example, the upstream activity can be broken down in development and manufacturing of satellites, rockets and services rendered to enable getting space objects up into orbit. Similarly, the downstream can be broken down into development and manufacture of ground segment, receivers, ground equipment and services include broadcasting, VSAT, imagery/GIS, navigational products/services, voice/data services. There are new services that are today emerging internationally such as satellite-based broadband, satellite-based IoT, satellite-based blockchain services.

Licensing requirements

It is important to note that the legal framework needed for operation for each of these activities are very different from each other. Some of the activities such as development and manufacturing of launch vehicle and other such critical export-controlled items under SCOMET, need to have an enhanced legal framework to meet international obligations of non-proliferation. Similarly, there are legitimate national security concerns of downstream products such as images and communications. Using a blanket cover within the Act to use abstract licensing procedures to address upstream activities and downstream does not make business sense. Instead, breaking down the Act into specific activities will allow to frame business rules and need for address international obligations, national security, environmental, health/safety, etc., in an alignment to the activity within the value chain.  

The Act in its current state does not do justice in addressing ‘ease of doing business’, which has been talked about for the past few years. Instead, the licensing requirement stated within the Act makes it harder for entrepreneurs to kick-off their products/services. The Government should note that not all products/services that are being conceived by non-governmental and private sector actors will reach the market. While licensing is a necessity in usage of frequencies to operate a space object, in export of space systems/services, launch of rockets, etc., it makes perfect sense to insert clauses of license requirements needed for specific activities within the value chain at the end of the tunnel (when entrepreneurs are ready with their product/service to be launched into the market).

Space is a tremendously difficult sector to do business in with barriers to entry being quite high in some activities in both requirements of capital as well as requirements in IP. Inserting blanket licensing requirements at the beginning of the tunnel for start-ups/SMEs will make it harder to even start their product/service development. Therefore, licensing may be placed as a requirement just before the release of the product/service into the market or export of it. This will ensure that start-ups can focus on getting their product/service ready and not worry about licensing requirements to start developing any preliminary IP on their product/service.

Assigning a nodal body

The Act has not specified any specific Department or body within the Government of India to take ownership of regulating space activities. Since the Indian Space Research Organisation falls under the ambit of the Department of Space (Prime Minister’s Office/Government of India), to ensure no conflict of interest arises between the State actor and non-governmental/private sector actors, an independent body should be nominated/created for the purpose of administration of space activities. One of the examples that can be considered for such framework within the country is the regulator put into place in the telecommunications sector with the Telecommunications Regulatory Authority of India (TRAI) being the regulator in charge of licensing and administration of actors in the country.

Some of the activities such as satellite-based communications need inter-Ministerial as well as inter-Departmental inputs today. For example, the Wireless Planning Commission of the Department of Telecommunications plays a vital role in the assignment of frequencies for space-based communications. Therefore, a nodal agency that has involvement of other Government of India Ministries/Department that are stakeholders in the space activity will ensure ‘ease of doing business’ and can enable single-window clearances in licensing, promote better conditions for Foreign Direct Investment (FDI), provide regulatory transparency among others.

The nodal body can also take up the onus on providing support frameworks for export of space products/services related matters, frame rules specific to authorisation, govern insurance/liability in accordance to international obligations in critical activities. The nodal agency can also act in providing regulatory support in the downstream ecosystem with taking up the governance of remote sensing data which today has not kept pace with international standards.

Therefore, having an independent nodal agency will ultimately impact entrepreneurial activity and will make or break the stimulation and catalysis needed to enable a space-based digital economy in the country. Today, new players in the space ecosystem such as Luxembourg have gone to provide sovereign national funds as well as legal frameworks to private companies to enable and capture potential business opportunities in space mining. While this may be debatable from an international obligations basis (referring to the Outer Space Treaty and Moon Treaty), they have gone on to provide national legal frameworks to enable businesses to own the material extracted out of space.

We should respect international obligations as well as national security concerns but not at the potential cost of jeopardising the creation of a vibrant space-based digital economy which has the potential to leapfrog initiatives such as Digital India.

Dealing with liability

There is a very real necessity of dealing with liability. Liabilities are very different for upstream activities such as spacecraft operations, launch/in-orbit operations against the use of space-based products/services on the ground such as data security for remote sensing products, communication handsets, etc. The Act uses a vague blanket cover against liabilities that is to be passed to the actors.

This again brings back the perspective of having the Act address specific activities within the value chain and assign liabilities that make sense to each of the activities. For example, the United States assigns a necessary insurance ceiling cover needed to be procured by space launches by commercial space transportation providers in case of any damages are sustained during launches. Any damages that are above the ceiling is presumed to be taken care of by the Government itself and aligns with the necessary obligations under the Outer Space Treaty and the Liability Convention are met. For example, the Wall Street Journal reports that the SpaceX Falcon 9 rocket carries $63 million in prelaunch liability coverage prescribed by the Federal Aviation Administration.

There are several established models for covering liability in international practices according to the kind of activity within the value chain (upstream/downstream) which can be employed and adjusted that resonates to the local Indian ecosystem. Using a blanket cover without any details on the ceiling for activities will make it extremely difficult for both the entrepreneurs as well as insurance providers to conduct any business. Therefore, the Act should consider aligning towards international best practices in dealing with liabilities.

Offenses and Penalties

One of the areas of concern in the section on offences and penalties is the ‘Punishment for causing damage or pollution to environment’.

Notwithstanding anything contained in any other law for the time being in force, any person who causes damage or pollution to the environment of the earth, airspace or outer space including celestial bodies by any space activity shall be punished with imprisonment …’

Pollution to the environment of outer space including celestial bodies needs to be defined. It is not clear if this would in line with the space debris ‘code of conduct’ based on the Inter-Agency Debris Mitigation Committee guidelines or other best practices in handling interplanetary missions. We may follow practices by countries such as France has taken to the legislative routes to mitigation of pollution in outer space (via mitigation of space debris), but there is a need to state the details in the Act.

 

Conclusion

The Act needs to consider breaking down the activities within the space and space-based ground activities to frame clear laws for the conduct of business, international obligations, national security concerns, protection of IP. It does not do justice to the entrepreneurial community if implemented as is. One of the exercises that can be conducted to align the Act to enable competitive ecosystem building for commercial space in India is to conduct a review of international best practices in managing the space value chain and inducting them within the Act.

The deadline to provide comments on the draft is 21.Dec.2017. Reach out to space-law@isro.gov.in to provide your comments.

Have more comments? Feel free to reach out to curator@newspaceindia.com