The space economy in India is set to grow to US$13b by 2025 at a CAGR of 6%: ISpA- EY report

• Satellite services and application segment would form the largest share of the space economy accounting for 36% of the space economy by 2025
• The space launch segment to grow the fastest by 2025 at a CAGR of 13% spurred by growing private participation, latest technology adoption and low cost of launch services
• Investment in spacetech start-ups increased 196% y-o-y in 2021; there are more than 100 spacetech start-ups in India

The dawn of the space economy in India has the potential to bridge the digital divide, usher in innovative spaced-based services and catapult India to the forefront of spacetech race, as per the latest ISpA-EY report, “Developing the space ecosystem in India: focusing on inclusive growth”. The report focuses on developing a holistic space ecosystem in India. It covers the outlook of the space economy in India and its potential to accelerate the socio-economic development of the country. The report focuses on the entire lifecycle of the space economy, including manufacturing, ground and launch segment, startups and end-user services. This report also provides regulatory landscape and inputs from industry to propel growth in the Indian space industry.

Indian space economy – key segment revenue and growth

Source: Mordor Intelligence, Allied Market research, EY analysis

The satellite services and application market in India will be driven by greater demand for high bandwidth and lower latency data requirements, connect the unconnected with voice and data communication services and increase in IoT and autonomous systems. In addition, increase in demand for military and defense satellite communication solutions is likely to spur the market forward.

• Consumer services to account for bulk of the satellite services market in India (accounting for 79% of total services market by 2025)
• From an end-user industry perspective, media and entertainment to account for 26% of the total services market by 2025, followed by retail and enterprise at 21% and Defense at 20%
• The remote sensing segment is expected to register one of the highest CAGR at 2% through 2025, driven by Increase in resolution of commercially available imagery and adoption of new-age technologies

Proportion of Indian satellite services market by end-user industry in 2025 (%), N=US$4.6b

Source: Allied Market Research, EY analysis

For satellite manufacturing, “Make in India” initiative is expected to spur growth owing to increased demand for small satellites. By 2025, satellite manufacturing segment will be the 2nd fastest growing in the Indian space economy. Setting-up space parks across the country is likely to give a fillip to companies operating across the space value chain, especially manufacturing. It will be key to attracting global startups working in the space sector and help to incubate spacetech companies in India.

Several companies are utilizing cutting-edge technologies to develop innovative launch solutions in India. They have built considerable expertise around the launch of LEO, MEO and GEO satellites and orbit management solutions. The launch segment is fast becoming a key focus area for startups and small and medium businesses (SMEs) in India to drive the innovation agenda and make use of new revenue opportunities.

Currently, India boasts of over 100 spacetech startups. The year 2021 was a watershed year for spacetech startups, with investments reaching US$68m, a y-o-y increase of 196%. There were a total 47 new spacetech startups established in India in 2021. Key drivers for investment in the Indian space segment are:

• The government’s push for inclusion of private players in the space segment
• Lower costs for developing and launching satellites
• Promise of substantial Return on Investment (RoI)
• Increased market demand for geospatial data
• Technological advancement in the space industry

Key considerations for creating an enabling space economy in India

• A single window approval process through a nodal body focused on space economy shall aid and ease the process of having in place requisite authorizations to enhance ease of doing business
• A comprehensive space policy covering upstream and downstream activities will help formulate vision and provide policy predictability to bolster investment climate
• Introduce Production Linked Incentive (PLI) scheme for satellite manufacturing, like mobile handsets and telecom equipment
• Promote independent launch solutions of Indian private companies for satellites and other spacecrafts
• Facilitate access to cost effective capital for startups
• Need for holistic skills development – competency of systems engineering, training on how to operate satellites skillfully, and technology associated with special alloy for launch vehicles

Lt. Gen. AK Bhatt, Director General, Indian Space Association:

“The maiden launch by a new Startup has significantly enhanced the credibility for Indian private space players around the globe. The capability that the sector has been claiming has been demonstrated in Space. Since its inception in 2018, Skyroot has come a long way in delivering its expertise in manufacturing of small lift launch vehicles by launching India’s first private rocket which was manufactured in just two years. The Vikram-S rocket’s success will further validate most of the technologies in the ‘Vikram’ series of space launch vehicles planned by Skyroot for the coming years. India’s space economy is set to grow to US$13b and the space launch segment is estimated to grow the fastest by 2025 at a CAGR of 13% which will be further spurred by growing private participation, latest technology adoption and low cost of launch services and this launch is a major landmark for this growth to take place in the coming years.”