Technology Clusters as Power Engines of Space 2.0

Introduction

India is one of the few nations to have developed a robust space program, covering space science, operational missions, and commercial space activity. Beginning with sounding rockets in the 1960s, India has traversed a long way to achieving a successful mission to Mars in 2014. The space program, fully developed and managed by the state-funded Indian Space Research Organisation (ISRO), has a wide spectrum capability to make satellites, launch them in desired orbits, and use them for a range of applications. The initial launch vehicle capability was established with the Satellite Launch Vehicle (SLV) and Augmented Satellite Launch Vehicle. The next in the fleet was the Polar Satellite Launch Vehicle (PSLV), which has become the workhorse of the space agency having placed 342 satellites in their respective orbits in 53 missions (till February 2021) in 3 decades. ¹ These satellites belonged to public and commercial entities from 34 countries.

The largest launch vehicle currently in use is the Geosynchronous Satellite Launch Vehicle (GSLV) Mark-II. The fourth-generation launcher has 3 stages, including the Cryogenic Upper Stage, with 4 liquid strap-ons. Its next version, GSLV Mark III, is designed for heavier payloads such as 4-tonne satellites for Geosynchronous Transfer Orbit. This is nearly double the capability of the Mark II Version. After 2 developmental flights, GSLV Mark III-M1 was deployed to place Chandrayaan-2 in the lunar orbit in July 2019. ² ISRO has to its credit a range of satellites of different sizes and capabilities for applications covering communication, meteorology, remote sensing, earth observation, navigation, climate observation, surveillance, search and rescue, and cartography. In space science, the agency's lunar mission that included an orbiter and impactor, Chandrayaan-1, successfully conducted chemical, mineralogical, and photo-geologic mapping of the lunar surface and found evidence of water in the exosphere, surface, and sub-surface of the Moon. ³

Headquartered in Bengaluru, ISRO has about 44 units spread across the country engaged in a range of activities—satellite design and fabrication, payload development, launch stations, ground stations, spacecraft control, satellite tracking, space science, remote sensing data acquisition and processing, liquid propulsion development, natural resources management, socioeconomic applications, training, and education. A bulk of them is located in and around Bengaluru, Thiruvananthapuram, and Ahmedabad. Other centers are located in Chandigarh, Jodhpur, Udaipur, Hyderabad, Dehradun, Nagpur, Kolkata, Shillong, Bhopal, Tirupati, Sriharikota, and Mahendragiri. ⁴ Though ISRO was formally incorporated in August 1969, space-related activity had already begun in 1962 under the Indian National Committee for Space Research. ⁵ The committee, housed in the Department of Atomic Energy under Dr. Vikram Sarabhai, established a facility to launch sounding rockets at Thumba, a fishing hamlet near Thiruvananthapuram for upper atmospheric research. The first rocket from the Thumba Equatorial Rocket Launching Station (TERLS) was fired on November 21, 1963, marking India's entry into the space age.

Developing Industry Capability

The technology vision for India's space programme was articulated in 1970 in a 10-year plan titled “Atomic Energy and Space Research—A Profile for the Decade 1970–1980.” The prime objective was to “develop indigenous competence for designing and building sophisticated hardware involved in space technology including rockets and satellites for scientific research and practical applications, the use of these systems for providing point-to-point communications and a national television hook-up through a direct broadcast synchronous satellite; and the application of satellites for meteorology and remote sensing of earth resources.” ⁶ It was an ambitious plan seeking to develop everything—satellites, launch vehicles, ground facilities, and applications.

The ISRO could not have achieved all this through in-house technology development and production and needed industry and academic support for the same. Technology denial under the Missile Technology Control Regime though meant for the missile program affected the procurement of critical materials, components, devices, and equipment even for the civilian space program as well. ⁷ This forced the space agency to look for industry sources domestically or to produce the technologies in-house. Satish Dhawan, who took over as head of the space agency in 1972, sought to involve the Indian industry in the space system development work. ⁸

Realizing the need for indigenous capability, the space agency developed a policy framework that was necessary to enthuse the Indian industry to participate in its projects. In 1977, the ISRO organized a scheme of technology transfer to and utilization of industrial capacities. This attracted more than 250 major, medium, and small industrial firms, and industry orders accounted for 45% to 60% of the total space budgets within 10 years. The ISRO encouraged large industries to develop dedicated “space divisions” with well-qualified technical staff and laid down quality procedures, to make space-qualified systems and subsystems as well as to handle services and engineering tasks farmed out by ISRO. This helped private players take over standardized tasks related to space systems in a phased manner. In effect, industries were treated as partners in development activity and referred to as “work centers.”

Industries in diverse sectors—electronics, computers, telecom, chemicals, scientific instruments, materials, and fabrication—were identified and nurtured so that they could produce and supply space-grade components and subsystems. Protocols and procedures were developed for type certification, demonstration, validation, and qualification. The project to develop a launcher—SLV—was a major activity of the decade. In this task, a total of 54 industries participated as a result of a pro-active engagement exercise Project Director A.P.J. Abdul Kalam initiated at the suggestion of Dhawan. ⁹

Since the vision outlined in the 10-Year Development Plan covered a fairly long period, it assured industrial partners of a sustained engagement with the space agency. For instance, the chemical industries were induced into taking up bulk manufacturing of special high-energy liquid propellants through long-term buy-back deals signed with ISRO. ¹⁰ In the Sriharikota range, specialized launch towers, flame deflectors, auxiliary power and service supplies, and material handling equipment were handled by private structural and engineering companies.

For the development and production of technologies and subsystems, a “consortium approach” that involved both industry and academic institutions was adopted. The space agency decided to have its development facilities only for areas where such capability did not exist in the country. For instance, the ISRO Satellite Centre (ISAC), engaged in developing satellite technology, worked closely with more than 30 private and public sector organizations in the 1970s. ¹¹ The consortium approach helped boost the capacity of both industry and academic institutions. This was necessary to build an industrial base to support the space program. For the satellite systems, ISAC sourced 70% of its electronic fabrication needs from the industry developed by it over the years.

Still, the role of private players in the space technology value-chain remained limited due to their “service-oriented partnership with the space agency and the lack of a non-turnkey solution environment.” ¹² Some change, however, is visible in recent years. For instance, the industry has been involved in the operation of some production facilities on a turnkey basis, such as the plant for the production of liquid hydrogen at the Liquid Propulsion Systems Centre (LPSC). Large sub-systems and rocket engines are produced in private and public sector units. The liquid-propelled Vikas engine of PSLV was produced at Godrej & Boyce in Mumbai and MTAR Technologies in Hyderabad. Liquid engines and stages, tankages, and cryogenic materials for the space program are produced in Thiruvananthapuram at BrahMos Aerospace Thiruvananthapuram Limited—originally a state public sector unit floated by former scientists of Vikram Sarabhai Space Centre (VSSC) who felt that it was better for ISRO to deal with just one vendor who could supply integrated engines instead of coordinating multiple sub-contracts. Technology collaboration has also resulted in industrial capacity to manufacture other critical materials and sub-systems—booster cases using Indian maraging steel, tanks and gas bottles with titanium alloys, special magnetic materials, carbon cloth and high-silica cloth, etc.

Beginning of Space Clusters

At the end of the 1970s, Ahmedabad, Thiruvananthapuram, and Bengaluru had emerged as centers of space activity, essentially housing the core developmental and operational work of the space agency. Hyderabad joined the list with the National Remote Sensing Agency, getting established there in 1974 first under the Department of Science and Technology and eventually becoming a part of the ISRO. ¹³

Thumba was selected for both scientific and logistical reasons. The challenge was to find a place on the Indian coast that is close to the earth's “magnetic equator” rather than the geographic equator, and it had to be relatively less densely populated since burnt-out rocket stages were expected to fall on the ground. ¹⁴ As the next step, a decision was taken in 1965 to establish the Space Science and Technology Centre (SSTC), near TERLS, to develop sounding rockets, modest satellite launchers, scientific payloads, as well as ground-based equipment. Initially, rockets launched from Thumba came from Nike-Apache. Local fabrication and manufacturing of rockets and propellants became necessary as the demand rose. An agreement was signed with Sud Aviation Company (later to be Aero Spatiale Company) to manufacture Centaure rockets—giving birth to the Rocket Fabrication Plant (RFP) at SSTC. The Rocket Propellant Plant (RPP) was also commissioned in 1969.

The choice of Thiruvanthpuram to locate SSTC attracted criticism, because the city lacked the academic and industrial infrastructure necessary for achieving the technological goal of building rockets and satellites. Compared with Bengaluru, which already had aerospace and electronics industries as well as higher education centers, Thiruvanthpuram had just one engineering college and some small industries. Sarabhai argued that the satellite group at SSTC and teams at TERLS could work with cohesion if both were located together. ¹⁵ Within a short period, the SSTC developed expertise in payload integration, rocket assembly, ranging, and telemetry. Thus, the first space cluster consisting of TERLS, SSTC, RPP, and RFP came up in Thiruvananthapuram.

The rocket activity in Thumba was an offshoot of atmospheric research Sarabhai had initiated at the Physical Research Laboratory (PRL) founded by him in 1947 in Ahmedabad. The PRL was involved in making scientific payloads for sounding rockets, high-flying balloons, and, finally, satellites. The first formal satellite development plan—the Indian Scientific Satellite Project—too was conceived at PRL. ¹⁶ Since PRL was the de facto headquarter of the space program under Sarabhai, he chose Ahmedabad for setting up another key project—Experimental Satellite Communication Earth Station (ESCES). ¹⁷ For the Satellite Instructional Television Experiment (SITE) project, NASA provided the space segment whereas the Indian side had to design, develop, and deploy the ground infrastructure (hardware as well as software) for the experiment. This work was handled by units dedicated to satellite communications systems, audio–visual instruction, microwave antenna systems engineering, electronics systems, and so on. ¹⁸

Bengaluru emerged on the space map after the formation of the ISRO, the Department of Space (DoS), and the Space Commission—with Satish Dhawan, an aeronautics engineer who was Director of the Indian Institute of Science (IISc) in Bengaluru, becoming its head in 1972. Dhawan agreed to take up the new role but had 2 conditions, according to some accounts. He did not want to leave his position at IISc and wanted the new organization to be modeled after Department of Atomic Energy and the Atomic Energy Commission.^19,20 Besides wanting to keep his academic links alive with IISc, Dhawan chose Bengaluru because it was a place where “many of the capabilities required in aerospace technology were more or less available compared to Ahmedabad or Delhi.” ²¹ It was the only city with an aerospace industry—in the form of National Aerospace Laboratories (NAL) and Hindustan Aeronautics Limited (HAL)—and academic institutions that offered courses in aeronautics engineering and a robust industrial environment. ²² Specifically for satellite development projects, facilities existed to support “environmental testing, fabrication of high-reliability electronic equipment and production of technologies and subsystems.” ⁹

Dhawan organized the space program. All units such as SITE and ESCES in Ahmedabad were bunched up to form the Space Applications Centre (SAC). The SSTC in Thiruvananthapuram was renamed VSSC and given a sharper focus. The Satellite Systems Division functioning at TERLS was moved to Bengaluru and rechristened as the ISAC—now known as the U R Rao Satellite Centre. The Telemetry Tracking and Command system was organized in 1976 under the ISRO Telemetry Tracking and Command Network.

In the initial phases of the Indian space program, clusters developed in cities where one or more ISRO units were located. With the progressive expansion of the space program, industry in and around main centers of space activity had a greater part to play. This was largely a supportive role, through a mechanism such as technology transfer, collaboration, outsourcing, etc. The first set of space technology clusters developed in cities, which broadly had the following common attributes:

Presence of one or more ISRO units

New Policy Frameworks

A major factor that helped shape techno-industrial clusters was the set of proactive policies of ISRO to encourage their involvement in the space program. For instance, the technology transfer group at ISRO introduced a decentralized system for know-how transfer to industry. Different development teams were allowed to interface directly with private industry, which helped in avoiding problems of technology absorption later on. The space agency also consolidated electronics and avionics requirements of different groups so that bulk orders could be placed. Bharat Electronics Limited formed a dedicated division for this. An aerospace division was created in HAL, partly funded by ISRO, as rocket fabrication needs went up with PSLV becoming operational. In some cases, the ISRO also made available special purpose machines to industry, in addition to know-how.

All these initiatives and partnerships worked under the general industrial and fiscal policies. There was no specific policy initiative for the promotion of the space or aerospace sector such as those formulated for electronics, automobile, or software services. For instance, the Software Technology Park of India scheme was designed to help small software firms to take up the export of software by using common facilities such as satellite data communication links and avail of tax concessions. For electronics production, separate Electronics Export Processing Zones were established. Space technology applications grew rapidly in the 1980s with the Indian National Satellite (INSAT) program as well as the rollout of National Informatics Centre Network (NICNET)—a satellite-based communication network for the government using the Very Small Aperture Terminal technology. Satellite television expanded rapidly after the economic liberalization unleashed in 1991. Many software companies began developing products for Satcom giants such as Hughes Communications and others. The market for remote sensing and geospatial data also saw an uptick in the 1990s. All such developments, however, remained fragmented in the absence of a specific policy framework to promote space hubs and clusters.

The situation, however, is poised to change with the clutch of new policy initiatives in recent years. New private entities are emerging as independent players, with their relationship with the space agency being different from that of a vendor, supplier, or contractor. Among the policies that are stimulating this change is the Start-Up India initiative launched by the Central Government in August 2015, to build an ecosystem to nurture innovation. The startup action plan announced in January 2016, included steps such as a compliance regime based on self-certification, a special fund to support innovation, a credit guarantee fund, tax exemption on capital gains and “investments above Fair Market Value,” and setting up of incubation centers. ²³ National Start-Up Awards were also announced, and every department and ministry were asked to implement the action plan. Global competitions and challenges in the space sector also spurred Indian startups.

The DoS and ISRO initiated steps to “boost start-up participation in space activities.” The space agency feels that startups are its “new age industry partners—one that will propel India in fulfilling its space dreams.” ²⁴ The ISRO teamed up with National Institution of Transforming India Aayog to jointly launch a Grand Challenge in September 2020 for new ideas and innovations in 3 specific areas—propulsion (green propellants, electric propulsion, advanced air-breathing), geospatial information (use of machine learning and artificial intelligence for crop monitoring, weather forecasting, etc.), and application of robotics, Augmented Reality, and Virtual Reality. For promoting startups specifically, the space agency in February 2021 announced an initiative named Space Enterprise Encouragement and Development. It is supposed to be a “competitive, early-stage encouragement program” for small businesses and startups interested in developing technologies and products for the core activities of the agency.

A major reform in the space sector was unveiled in September 2020, as part of the economic package to revive the economy hit due to the coronavirus pandemic. The formation of a new wing, In-SPACE or Indian National Space Promotion and Authorization Centre, within the ISRO, paved the way for a mechanism to allow private companies to participate in core space activities—building rockets and satellites as well as space applications. Besides allowing non-government private entities to build, operate, and control satellites and all associated infrastructure, the space agency also opened the doors of all its centers for use by private companies, including setting up of their facilities in the ISRO premises. Subsequently, more policy reforms were announced such as the guidelines for accessing geospatial data that were liberalized for “stimulating and empowering” industry and surveying agencies “without diluting security concerns.” ²⁵ Another reform came in the firm of the draft Space Communication Policy, which, among other measures, promises to “promote increased participation of commercial Indian industry to provide space-based communications both within the country and outside.” It proposes to let “commercial Indian industry establish and operate space-based communication systems.” Indian companies will be able to use both Indian and foreign orbital resources for this.

Emerging Space Clusters

The policy changes are likely to boost the space startup ecosystem in India, and they also encourage large industrial houses to enter the segment through acquisitions. In December 2020, Agnikul Cosmos Private Limited signed an agreement with the ISRO to access its facilities and technical expertise to launch a vehicle development program under the In-SPACE framework. The agreement will let the private firm use ISRO facilities for “testing and qualifying” its launch vehicles. ²⁶ Agnikul is incubated in the National Centre for Combustion R&D at the Indian Institute of Technology Madras (IITM), Chennai. Hyderabad-based Skyroot Aerospace Private Limited too signed a similar deal with ISRO in February 2021 ²⁷ The company is working on a launch vehicle called Vikram, which it hopes to launch by 2023. About 25 private companies have approached the space agency seeking permission to use its facilities or support for undertaking their activities. These proposals cover a range of activities—satellite constellations, small SLVs, ground stations, geospatial services, propulsion systems, and application products. ²⁸

Besides, the New India Space Limited (NSIL), the second commercial arm of ISRO after Antrix Corporation, has started signing up commercial deals with private companies in India. One such will allow Bengaluru-based Pixxel to launch the first of its earth observation satellites using PSLV in 2021. ²⁹ Its constellation will have a total of 24 satellites. Another Bengaluru firm, Astrome, plans to launch a constellation of 198 Low-Earth Orbit satellites. ³⁰ The Hyderabad-based Ananth Technologies, which provides engineering services to ISRO, is building satellites for customers in France and Sweden.

The space agency has also constituted Space Technology Incubation Centres in engineering colleges—one each in 6 regions of the country, to promote “space entrepreneurs.” ³¹ The National Start-Up Awards, instituted by the Department for Promotion of Industry and Internal Trade, attracted 15 entries in the “space tech solutions” category for 2020. Among the winners were Skyroot, Dhruva Space Private Limited (both based in Hyderabad), and Bellatrix Aerospace Private Limited (Mysore). The Mumbai-based Manstu Space Technologies Private Limited was also a finalist. Overall, close to 40 startups were working in India with “funding, teams and structure” on space projects, as noted in the government's Economic Survey presented in the Parliament in January 2021. ³²

Here is a brief exploratory description of the emerging and future space clusters, in the context of the ISRO's engagement with industry in the past 4 decades and the new policy environment, along with state-level policy initiatives that are driving opportunities for startups in the space segment:

Gaps and Future Outlook

A cluster represents a significant level of local activity, complemented by spatial density and linkages among local firms. ⁴⁰ This structure allows the mobility of the workforce across firms, the flow of technical knowledge and skills, and the use of shared inputs such as research institutes and universities in proximity. A technology cluster may be focused on a specific area but serves multiple sectors and geographies while making a significant contribution to the economy.

The formation of clusters focused on one or more sectors is not a new idea. India has had textile towns with a concentration of textile mills such as Bombay, Ahmedabad, and Kanpur in the colonial era. In the present era, towns such as Coimbatore and Tirupur fall in the same category. Automotive manufacturing clusters have developed in Pune and Chennai. Globally, the most famous example of a technology cluster is the Silicon Valley in the United States, and a few other similar clusters in the United States and elsewhere. Bangalore and Hyderabad house IT and R&D clusters catering to Fortune 500 companies. In Hyderabad, a biotechnology and pharma cluster called Genome Valley has been developed, taking advantage of pre-existing centers of knowledge creation, production, and dissemination (clients and consumers). It also benefits from global innovation networks. ⁴¹

For technology clusters to develop, one of the key prerequisites is the availability of an anchor center of knowledge production (academic or research body or an industrial entity to cater to). In addition, it needs the availability of and access to market, demand, favorable government policies, financial incentives, etc. Silicon Valley took shape from the ideas and innovations germinating at Stanford University. However, the mere presence of the IIT did not lead to the development of an industrial or knowledge cluster in Kanpur because other enabling factors were absent. IIT Kanpur stands out, because it was developed with direct inputs from U.S. technology universities. Another example is the Electronics City planned by the Karnataka government in Bangalore in 1977. It developed very slowly in the first 10 years, despite the availability of infrastructure. ⁴² It got a boost only after the Software Technology Park was located there, which enabled small and medium enterprises to access the Western markets using affordable data links provided in the park. Combination factors—availability of skilled manpower, enabling policies and incentives, and access to market and capital—lead to the formation of clusters. To help SMEs connect with global supply chains and feed into national programs, the state government in Karnataka in 2019 established the Karnataka Aerospace Technology Centre in Bengaluru.

As discussed in the previous section, space-related industrial activity in the private sector has so far developed around the programs of the ISRO and mostly in cities where ISRO units are located. The activity in these centers is slowly getting diverse and robust, with space startups taking up developmental work independent of ISRO projects. Space clusters stand to benefit through synergies with existing clusters such as software parks, which include engineering R&D as well as silicon design. In some cities, defense and aerospace clusters are taking shape. Space startups could benefit from this eco-system, given overlapping technologies, materials, and manufacturing skills. The space industry ecosystem in Tamil Nadu is growing in an integrated way with the aerospace and defense industries. The state government in 2019 unveiled a new policy for aerospace and defense manufacturing in the private sector. It provides for financial incentives, tax breaks, and other benefits. The definition of “aerospace” in the policy includes Original Equipment Manufacturer (OEM) suppliers and other companies serving the needs of ISRO and HAL. ³³ Gujarat and Telangana too have announced special policies for the aerospace sector.

In the new policy environment to promote startups and the space industry in the private sector, early trends show that startups are emerging in existing technology clusters such as Bengaluru and Hyderabad. In addition to factors such as the availability of educational and techno-industrial infrastructure, policies designed specifically for startups and MSME are attracting new players to existing technology hubs. The ISRO and its units too have unleashed programs to incubate startups under the framework of the national program, but much of the space startups are coming up outside the ISRO initiative. Their relationship with the space agency is also configured differently than the traditional contractor-supplier-vendor relationship that dominated earlier. The large fabrication and manufacturing activities in the private sector are also poised to expand a great deal, with the ISRO deciding to farm out satellite fabrication and rocket manufacturing to private players. New startups too will benefit from the existing space manufacturing capacity in the private sector.

On the academic front, the space agency has promoted Space Technology Incubation Centres at engineering colleges in different parts of the country, on the lines of Space Technology Cells that were formed in the IITs in the 1970s and 1980s. Students and research scholars will be encouraged to take up research projects relevant to the present and future missions of the space agency. The outcomes will be translated into “proof of concept” and prototypes with help from industries in the respective regions. ⁴³ The overall objective, according to the ISRO, is to produce space entrepreneurs. These centers have been located at the National Institutes of Technology at Nagpur, Bhopal, Rourkela, Agartala, Jalandhar, and Tiruchirapalli. Each regional center is supposed to work with industries in several states in its region. Most of these cities house large public sector units, manufacturing industries, and software firms. Some of them can be potentially developed into space technology hubs through conducive policies.

Besides conducive policies and academic linkages as well as a strong flow of technical manpower, capital flow is critical for space clusters to take shape and sustain themselves. As of now, it is largely fragmented and mostly coming from venture capitalists. Big-ticket foreign direct investment (FDI) or those from large industrial houses have not yet begun. In response to the Expression of Interest for building PSLV, floated by NSIL in 2019, 5 entities responded. The list included consortia of HAL and L&T; Adani Group, Alpha Design BEL, and BEML; whereas BHEL has shown interest as a single firm. ⁴⁴ To take advantage of global space markets, Indian startups will also have to forge partnerships with players in other emerging markets.

Another gap in the emerging space ecosystem is the absence of an independent regulatory system. In-SPACE has been positioned to be both a promotional and regulatory body, which is confusing and leaves room for conflict of interest since it is housed within the DoS—the parent body of ISRO. Through FDI up to 100% has been permitted in satellite ownership and operation; investors are wary because of the hazy regulatory structure and unclear processes. ⁴⁵ The approach of the Indian government for space regulation is similar to the one it took for the telecom sector in the 1990s. Till an independent Telecom Regulatory Authority of India was formed, the Department of Telecommunications continued to be a service provider as well as the regulator.

Conclusions

Spurred by the policy changes that open up the space segment to private players, a new space industry is taking shape in India. The sector is attracting startups in satellite fabrication, launch vehicle development, and applications such as navigation, earth observation, etc. In addition to deploying new technologies and platforms, startups are building on the existing strengths such as the availability of skilled manpower, design and fabrication expertise, and the manufacturing industry with experience in space-grade components and subsystems. Most of the new players are coming up in established technology and manufacturing centers, which have served the needs of the ISRO all these years. However, the character of these centers is changing from being home to large public sector units to technology enclaves modeled on existing IT parks. Besides the policies of the central government to promote startups, states have developed new policies to boost aerospace industries, including the space segment. The ISRO has plans to incubate startups in collaboration with technology institutes in different parts of the country. The combined effect of all this could boost the emergence of new space clusters in cities where space activity has traditionally flourished (Bengaluru, Hyderabad, etc.) as well as in centers of technology education and research such as Nagpur, Tiruchirappalli, Jodhpur, Goa, etc., besides IT hubs such as Mohali and Noida-Gurgaon in future.

This is an exploratory study that examined the historical trajectory and new changes in the context of potential space clusters in India. A full-length strengths, weaknesses, opportunities, and threats analysis is needed for all the emerging clusters and to identify new ones, along with studies based on empirical data on capital flows, availability, and quality of engineering skills.