Contribution of Space Sector to India’s GDP

Syllabus: GS3/ Economy

Context

India’s space sector has directly contributed about $24 billion (₹20,000 crore) to India’s Gross Domestic Product over the last decade.

India’s space sector has benefitted from decades of consistent investment, with $13 billion invested in the last decade.
- It is the 8th largest space economy (in terms of funding) in the world.
In the recently announced Union Budget for 2024-25, India’s space sector received a significant boost. The Central government allocated ₹13,042.75 crore to support space-related initiatives.

The Sector has supported 96,000 jobs in the public and private sector.
For every dollar produced by the space sector, there was a multiplier effect of $2.54 to the Indian economy and India’s space force was 2.5 times more productive than the country’s broader industrial workforce.
The Indian space sector was diversifying and now had 700 companies including 200 start-ups and had seen revenues grow to $6.3 billion in 2023, which was about 1.5% of the global space market.
Satellite communications contributed 54% to the space economy, followed by navigation (26%) and launches (11%).
- The main industries supported by the space sector were telecom (25%), information technology (10%) and administrative services (7%).

Under the amended FDI policy, 100% FDI is allowed in the space sector. The entry route for the various activities are as follows:
- Up to 74% under Automatic route: Satellites-Manufacturing & Operation, Satellite Data Products and Ground Segment & User Segment.
- Up to 49% under Automatic route: Launch Vehicles and associated systems or subsystems, Creation of Spaceports for launching and receiving Spacecraft.
- Up to 100% under Automatic route: Manufacturing of components and systems/ sub-systems for satellites, ground segment and user segment.

Export Potential and Investment: Currently, India’s export market share in space-related services stands at ₹2,400 crore (about $0.3 billion). The goal is to boost this to ₹88,000 crore ($11 billion).
Rise of Space Tourism: In 2023, the space tourism market was valued at $848.28 million.
- It is expected to grow to $27,861.99 million by 2032.

Competition and Global Market Share: To achieve this ambitious goal of 8% of the global market share, Indian space companies must compete effectively on the international stage.
Private Sector Participation: While the private sector has shown interest, there’s a need for more substantial investment and commitment.
Technology Development and Innovation: Developing cutting-edge technologies, such as reusable launch vehicles, miniaturized satellites, and advanced propulsion systems, requires substantial investment and research.
Regulatory Framework and Licensing: Navigating licensing processes, export controls, and compliance can be complex.
Infrastructure and Facilities: Developing and maintaining such infrastructure requires significant capital.

Indian Space Policy 2023: It laid down roles and responsibilities of organizations such as ISRO, New Space India Limited (NSIL) and private sector entities.
- It aims to enhance the participation of research, academia, startups and industry.
Strategic Proposals by SIA: The Space Industry Association – India (SIA-India) in its Pre-Budget Memorandum for the FY 2024-25 has proposed a substantial increase in India’s space budget.
- It aims to support India’s expanding space program, foster private sector involvement, drive technological advancements, and position the nation as a key player in the dynamic global space ecosystem.

India aims to commission the Bharatiya Antariksha Station (BAS) by 2035 and land Indian astronauts on the Moon by 2040.
Private entities are now actively involved in crucial aspects of research, manufacturing, and fabrication of rockets and satellites, fostering a vibrant ecosystem of innovation. It is expected to integrate Indian companies into global value chains.
With this, companies will be able to set up their manufacturing facilities within the country duly encouraging ‘Make In India (MII)’ and ‘Atmanirbhar Bharat’ initiatives of the Government.

Source: TH

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