Strengthen the Startup Ecosystem to Enhance India’s Space Prowess

Sub Title : Startup companies in space need encouragement from the government

Issues Details : Vol 16 Issue 3 Jul – Aug 2022

Author : Wing Commander Satyam Kushwaha (Retd)

Page No. : 25

Category : Military Technology

: August 4, 2022

To enhance India’s Space Prowess and boost space economy within the country, the Indian Government is  encouraging the participation of  startups in space activities. To be able to contribute meaningfully to the endeavour startups will require assistance from the Government and appropriate policies. The article puts forth suggestions

India, the global Vishwa Guru India, is on the roll. In its new avatar, an assertive and rising India is enhancing its global as well as regional influence. We have smartly handled both national security challenges as well as issues of national interest in an increasingly complex multi-polar environment. Our economic growth, powered by Information and Communication Technology (ICT), is a matter of global awe.

All of this has been possible despite our critical national security challenges, which are unique. Besides being sandwiched between two untrustworthy adversarial nuclear armed states  which are always up to constant mischief, we are seeing rising friction; volatilities in the neighbourhood and beyond; inter-state conflicts; use of non-kinetic tools like information warfare to spread misinformation, create terror, politico-social friction and instability; and, use of cyber and space capabilities against military, governance frameworks, industry and citizens.

Cyber, Electronic Warfare and Space (CEWS), being borderless as well most benign, are most disruptive because they are used by both friend and foes alike to measure, map, monitor, analyse, penetrate and manage activities as well as predict outcomes which could be against our national interests. Further, technology developments being dynamic by nature, there is no single and permanent silver bullet for creating effective resilience as well as deterrence because of which we need regular and continuous investments for technology updation as well as development as per Indian Characteristics. Moreover, external dependence for hardware and chips, which are subject to supply chain attacks, make it impossible to develop resilient solutions in true sense.

The rising technology and capacity asymmetry vis-à-vis China in areas of ICT, Cyber Security & Information Warfare; and, Space are a cause of concern for all major powers in the world including the US. The ICT driven Revolution of Military Affairs (RMA) is seeing increased use of multi-domain capabilities in Cyber and Space with focus on Net-Centric Capabilities which are both Secure and instantly scalable. We are also seeing increased use of Grey-Zone Warfare and Hybrid Warfare, using non-kinetic disruptive technologies driving to impact military, governance, industry and the citizens for political aims.

The Ukraine-Russia conflict has also brought in some very compelling multi-dimensional lessons which relate to war fighting tactics; force structuring; weapon employment; strategy; ownership and geopolitics of technology; as well as innovations in leveraging Cyber, Electronic Warfare and Space (CEWS) for warfighting. There is compelling case for us to refine, upgrade and update our capabilities which includes design and development of new generation weapons which are unique with Indian characteristics. Building Strategic Self-reliance in the military domain, to include CEWS, is a mission which can no longer be deferred.

Fortunately for India, the Make in India and as well as Atmanirbhar initiative of the Hon’ ble Prime Minister have come at the right time. Some major developments of recent times which merit attention relate to the field of ICT and Space which are intertwined. Firstly, India has embarked upon the much-awaited path to setup a chip fabrication facility, which so far was a considered as a challenge due to high costs. This capability when operational will be the foundational enabler to cutting edge hardware products in CEWS domain. Secondly, the opening up of the Space Sector for commercial activity by the Government is a Visionary step by the Hon’ble Prime Minister which needs both applause as well as dedicated hard work with a “whole of nation approach” with deep interfacing of military, industry, R&D institutions and academia supported by strong funding resources and political will.

The Geopolitics of Technology has never been as complex and challenging as it is today. The chessboard of technology is seeing increasing contest between nation states with aspirations for global control and influence; creating denial regimes; reducing dependencies; restrictions; deep end user monitoring; resource control; cyber challenges etc., all of which are designed to ensure that only a few retain the edge to control or exert influence in various forms or format. The journey to achieve such capabilities would have its own set of challenges as no nation, however friendly, would like to part with its niche technologies. It may be noteworthy to mention that despite India having been  subjected to sanctions as well as targeted technology denials from time to time, government supported institutions like DRDO, ISRO and HAL have delivered key capabilities. However, given the scale, volume and diversity of indigenous technology required for Strategic Applications as well as Industrial use, it’s time for a collaborative approach with Indian Industry being taken as co-traveller and partner to building our Comprehensive National Defence & Technology Capability & Capacity.

India needs strong capabilities to protect our sovereignty and assets in all dimensions, including in Space; and, ensuring a safe and peaceful internal environment for effective governance, harmony, academic, industrial growth etc. A strong military needs a cyber resilient, technologically advanced, self-reliant, robust, and dynamically responsive military-industrial complex to support our national security aspirations as well as creating politico-military influence zones through defence exports. Such capabilities need to integrated with cyber resilience from design stage, standard driven and tailormade to serve Indian Armed Forces.

Space, a dual-use domain, is also becoming an existential necessity of our daily lives. Easier and cheaper access to Space Technology is fuelling a race between nation states to build technology which would enable them to ensure safe and secure use of Space Domain to serve their national interests while also creating deterrent capability to disrupt the use of the same by adversaries. The chessboard of space is seeing nation states making significant investments for exploitation of Space for both commercial and security purposes.

The Hon’ble Prime Minister’s push for Make in India and Atmanirbhar Bharat has created the right energy, environment and inspiration within the citizens to embrace entrepreneurship. The unfolding of his vision to make India a global space power has inspired many. A recent study revealed that more than 40% startups in India are focussed on the Space Domain, which is the highest anywhere in the world.

India will need to take some important steps for Atmanirbhar Bharat initiative to bring the desired impact to the space sector. Some important aspects are being discussed in the succeeding paragraphs.

Firstly, it needs to be understood that Space Technology development is time consuming; has long gestation periods; high on cost with high risk of failure. Hence, not many venture into this domain. Further, getting investments into the same are not as simple as other sectors. Startups are lean and mean structures, which are geared to be agile and responsive for fastrack technology development. Many lack the ability to deal and navigate through the thick red-tape of the government.

Secondly, there needs to be a mindset change which should get reflected in our methods, processes as well as procedures. There has to be a will within the government system to adopt and absorb technology and upgrade legacy methods of working.

Thirdly, startups, especially in the Defence Domain are Warriors in their own stead dealing with multi-faceted challenges which include; (1) nuances of technology development and meeting milestones for meeting investor requirements; (2) competitive environment; (3) timely availability of testing facilities; (4) access and availability of adequate funds; (4) timely availability of permissions and approvals for proving technology in space; (5) protection of IPR and technology from duplication including IPR issues while dealing with government agencies; (6) market viability due overcrowding in some areas; and, (7) generation of market demand (assured market access). Of these funding and market access continue to be the most important challenges faced by our startups.

Fourthly, the entrepreneurs need hand holding and support in terms of constant guidance, review as well as feedback. While we have lately seen a positive response at the Directorates (within the defence services) dealing with startups, the message needs to percolate deeper and wider. Much more needs to be done to make it easier for startups to connect with users.

Fifthly, it would be a good step on part of Government to create a national listing of startups and technology to facilitate easy search and connect with technologies under development.

Sixthly, the MoD has been a great enabler for startups through their Make and iDEX programs and a good departure from the NCNC (no cost and no commitment) regime which are often unsustainable for startups. Refinement in IPR conditions as well as positive tweaking of some of their terms and conditions would make these programs much more startup and investor friendly and energize greater participation. This is specifically applicable for Defence Space Technology Development, wherein technology development is capital intensive with limited orders without assurances of a continuous assured demand. For such cases, improved investment friendly policies and guidelines would make it lucrative for private funding agencies and VCs to pump in funds to bring scalability and growth.

Seventhly, MEA could help by routing demands received from friendly countries to Indian startups and companies. This could also include support in terms of extending lines of credit through Exim Bank for execution of projects in recipient countries.  MEA could also consider promoting Indian startups  through its missions as well as facilitating organizing of Webinars to spread awareness of Indian Technology in friendly countries.

Eighthly, there is a need for both government and big business houses/ funding agencies to join hands to take a leap of faith and fund strategically important technologies through various rounds for scaling up. Loss of company ownership to foreign funding agencies in key niche areas of strategically important areas needs to be avoided at all costs.

Ninthly, the space ecosystem needs to be nurtured in manner that it adopts a standards driven approach towards technology development as well as focusses on reducing our foreign dependence in stage wise manner. Lessons from experience from global space as well as defence aerospace sectors could help refine our approaches in this regard. Role of the Defence Space Agency would be instrumental in this regard.

Tenthly, India’s strength lies in software, application development and services sector. We need to leverage the same for our deep tech, space and cyber sector to work in an intertwined manner to develop new generation cutting edge capabilities in this sector. The Government including MoD may consider new models for supporting the startup ecosystem. Some of the ideas could include MoD funding startups/ consortium for technology development, facilitating scale of startups using private funds and allowing them to scale up to serve global market with some assured buyback from such companies. The government buy back in terms of capability as a service as well as data as a service would meet government requirements while ensuring support for such startups.

Eleventhly, Capacity Development in terms of awareness, knowledge and skilling is another important area which needs focussed attention right from school level through strong STEM ecosystem. Building awareness on deep tech, cyber, space and AI amongst the student community as well as grooming them for both technology development as well as business design (solutions design, Business Model Design, Scaling up as well as sustainability of startups) are important areas besides core and applied engineering capabilities in academic institutions. We also need to focus on government departments as well as MoD in building expert capacity to steer such technology development projects. This would include capacity development within government departments to examine as to how they can adopt technology to become more efficient as well as effective. Accurate articulation of such requirements leading to successful processing of demand by government departments has often been a grey area which needs urgent attention. Hesitation to adopt technology, specially at certain levels of government has often been a stumbling block. It needs to be kept in mind that responsibility of technology adoption and deployment is not passed on to startups and industry, which is not usually geared to handle navigation through red-tape and government processes.

Twelfthly, timely clearance of invoices for the industry, specially startups would play an important role in ensuring health of startups. In-ordinate delays at various levels, despite clearance of Acceptance Tests results in cash-flow issues and financial challenges for startups. Some suggestions like creation of special cell for clearing startups dues through an automated, paperless, fast-track clearance mechanism, with time bound deemed approvals could be considered by Min of Finance/CDA.

Lastly, a progressive policy and bill on Space along with enabling guidelines offering long term stability, facilitating a responsive single window clearance mechanism is the need of the hour. Further, supportive FDI Guidelines like opening up of all domains of space to 74%  FDI by automatic route (as in defence), Tax Incentives, Import Duty exemptions, PLI schemes as well as easy terms for bank guarantees, and low interest long term loans need to be enabled to add the necessary energy to the Space Sector. The government could also consider examining challenges in banks lending money to startups and easing processes linked to that.

It would be important to note that it’s the collective responsibility of all stake holders to make our deep tech, space and cyber industry viable, globally competitive and scaled up to capture a significant footprint both in terms of services and manufacturing. A whole of nation approach will help ensure that we build our capabilities in a collaborative manner through best business practices to meet our national aspirations. Organizations like the Indian Space Association (ISpA) are deeply engaged with the government and all other stakeholders to help build a strong Private Space Ecosystem in India which would serve both global, national and strategic demands as per the cardinal principles laid down by the Hon’ ble Prime Minister.

To Make India Great in Space, we must all place India First, Always and Every time. It’s the need of the hour to join hands for nation building by strengthening our Warrior Entrepreneurs on the Chess Board for Technology Geopolitics.