Unlocking the Economic Potential of the Indian Space Program

India’s ambitious space odyssey has created new opportunities in the Indian aerospace industry. The technology and human capital fostered by the space program is poised to unleash a new generation of companies driving unparalleled growth in Indian industry.

On Independence Day 2018, Prime Minister Narendra Modi proclaimed the launch of India’s first manned spaceflight mission, saying “When India celebrates 75th year of Independence in 2022, and if possible even before, an Indian son or daughter will undertake a manned space mission on board ‘Ganganyaan’ carrying the national flag.”

The speech had echoes of US President John F. Kennedy’s 1961 speech declaring the US mission to put a man on the moon by the end of the decade. The mission was announced in the backdrop of the Cold War space race between the US and the Soviet Union, and famously culminated in the Apollo 11 Moon Landing in 1969 with Neil Armstrong’s immortal words, “One small step for man, one giant leap for mankind.”

There are clear geo-political overtones to India’s space program as well. India wants to assert itself as a powerful Asian nation, but runs the risk of being overshadowed by the formidable might of China, who recently proved their space technology by landing a moon rover on the far side of the Moon for the very first time. Such an achievement is an unmistakable statement of intent by a country that wants to assert its international status. India also sees its own space program as a display of its self-sufficiency and technological advancement.

However, let’s set aside this game of thrones and focus on the remarkable economic and technological impact of these programs. Indeed, if the American example is anything to go by, Indian industrial and technological capabilities are set for a revolution. One that will create a massive opportunity for Indian entrepreneurs and the wider economy; perhaps even as much as $100 billion.

Why Do Countries Invest in Space Programs?

In a emerging economy like India, the main criticism of spending on space exploration is that the money may be far better spent on addressing pressing on-ground concerns like healthcare, education, sanitation and infrastructure. This argument highlights the opportunity cost of spending, for instance, an estimated $1.4 billion on the Gaganyaan manned space mission instead of allocating it for poverty alleviation.

However, history has shown that developing an indigenous aerospace industry comes with significant long-term economic benefits, which manifest in two main ways. The first is through the development of capital goods industries to produce advanced equipment and systems within a defined period of time. This immediately boosts productivity across industrial sectors like mining, manufacturing, construction and utilities – industries that are in desperate need of capital investment and modernization in India.

The second effect is the ‘economic driver’ impact of the propagation of new technologies and human capital across the economy. This effect takes place over a longer time-frame and amplifies the initial benefits of capital expansion as the technologies developed for spaceflight are adapted to address the needs of consumers on the ground. Neither of these effects can materialize without proper government support. However, a mission-oriented approach taken by a central authority can pay dividends in the long term.

The American Example: Apollo 11 Moon Landing

Today, we usually view the Apollo Program as a monumental human achievement. However, in the upheaval of the 1960s in the US, space exploration was a subject of hot debate and much of the American public was against the Space Program. The US government positioned it as a technological necessity given the space technology being developed by its mortal rival, the Soviet Union (which is in stark contrast to the case in India today, where the government focuses on the economic and technological benefits of space exploration). Of course, the Moon Landing in 1969 changed all that and subsequent advances in consumer technology derived from the aerospace industry quieted opposition to US spaceflight.

The Apollo program cost an estimated $25 billion, which is over $100 billion in today’s money. This spending contributed to a vast expansion in capital goods production capacity and expertise, which is continuing to pay dividends to this day, even though the program ended in 1975!

This spending contributed to rapid advances in industries as varied as computing, propulsion, navigation, communications, materials technology, energy, clothing, medicine, imaging, video games and household cleaning. It also directly led to the development of technically proficient human capital – people who went on to found ground-breaking companies like Intel, AMD and Nvidia, among many others.

We have selected some of the notable advances incubated by the US space program in Figure 1. As you can see, the impact is profound and far-ranging.

Once in a lifetime opportunity for Indian entrepreneurs

Entrepreneurs in India face a similar opportunity to their American counterparts from the 1960s. they stand at the threshold of the coming technological revolution and the far-minded among them will have already set their eyes on playing their part in the larger industrial expansion.

The Indian space program was founded in 1962 and has achieved a series of momentous accomplishments along the way (see Figure 2 for more details). The Indian Space Research Organization (ISRO) has fought its way up from being a scrappy upstart running on shoestring budgets to one of the most efficient, well-funded and technologically advanced space programs in the world

Today, ISRO is a world-leader in satellite technology, intra-solar exploration and launch capabilities. The indigenously developed Polar Satellite Launch Vehicle (PSLV) is one of the most reliable and cost-effective launch platforms in the world. In recent years, ISRO developed and launched a satellite network creating a GPS system for the South Asia region, sent missions to the Moon and Mars, and broke the world record for simultaneous satellite launches with a 104-satellite launch in 2017.

In the coming years, India plans to send additional missions to the Moon and Mars in addition to the Gaganyaan manned spaceflight mission. All these missions will require technical capacities that do not currently exist in India, providing an opportunity for domestic entrepreneurs to step into the space. These opportunities will exist across the industrial economy – from more resilient screws, rubber parts and fabrics, to futuristic composite materials and rocket fuel.

The best analogy would be the development of the automotive component industry in India. In the early 1990s this industry barely existed in India, but as manufacturers set up factories domestically there was a rapid expansion of industrial capabilities all the way down the supply chain. Today, India is one of the world’s leading producers of automotive components, and the industry contributes 2.3% of India’s GDP.

Launching India’s Next Generation into the Next Century

For the first few decades after independence, India was in the first phase of emerging economies where the focus was entirely on subsistence and survival. The advancements made possible by the Green Revolution and Economic Liberalization opened the door to the second phase, where subsistence was no longer a concern and the country could focus on increasing productivity and improving quality of life. Today, India stands on the cusp of the third phase – establishing itself as leading member of the international community by leaving a mark and influencing the future of humanity.

India’s challenges are different from those faced by the pioneers of space exploration. Since much of the required technology already exists, the challenge is one of technical capacity and skilled manpower rather than innovation. India has made great progress in the service sector and information technology, but its manufacturing sector has lagged the rest of the economy. India needs to rapidly scale up domestic production capacities while increasing manufacturing standards to the ‘no-defect’ level required in the aerospace industry and creating an ecosystem that fosters technological advancement.

There is a clear long-term roadmap to India’s pursuit of space supremacy, but this path is paved with short-term opportunities worth billions for both large legacy players as well as young start-ups. Those that can capitalize on this will ride the crest of the wave bringing the Indian economy into the 21st Century.