India – Race For Space.

Spearheaded by the Department of Space and Indian Space Research Organisation (ISRO), India has developed low cost indigenous space capabilities for peaceful purposes over five decades. The proposed Space Activities Bill, 2017(Bill), seeks to dismantle the Government monopoly on space and encourage private sector involvement. Will it lead to advancement of the space programme?

Globally, the space sector is no longer the preserve of Governments, as entry barriers to private players are being lifted[1]. The need for technological advancement, cost reduction and emerging opportunities such as mineral exploration of planets, are some of the reasons for encouraging the private sector. ISRO began commercialising certain space activities by opting for a public-private partnership model[2]. It has since seen many start-ups, but has yet to translate into a wider role for the private sector.  

One of the primary reasons for such absence of private sector was the lack of a legal framework for their participation. While India is party to five international space treaties[3], the most significant one being the Outer Space Treaty, 1967 (Outer Space Treaty), a comprehensive domestic law regulating space activity is missing. Previous attempts at privatisation included the Satellite Communication Policy, 1999 and Remote Sensing Data Policy, 2001, but these did not meet with desired success[4]. The Bill is thus a welcome change and is expected to “encourage enhanced participation of non-governmental/private sector agencies in space activities in India”.

The Bill applies to the whole of India including, inter alia, citizens who are engaged in any space activity outside India. A person can undertake ‘commercial space activity’ (defined as an activity generating revenue or profit) only pursuant to a licence issued by the Central Government. A license once issued can be transferred only with the prior written approval of the Central Government and may be revoked, suspended or varied in case of, interalia, breach of conditions, interest of public health, sovereignty, defence of India or if continuation of such license is detrimental to the interest of India. Given the sensitivity of the sector, licensing is inevitable. However, care should be taken to prevent over-regulation that might stymie private sector inclusion.

The term ‘person’ has been defined widely and potentially includes non-residents who can apply for licences for commercial space activities in India. It may be noted that 100% foreign direct investment is permitted in the satellite sector subject to sectoral guidelines determined by the Department of Space or ISRO. The term ‘space activity’ includes even the use of a space object which has led to concerns from experts[5] that every application that uses a satellite-based service or link such as GPS devices would require licensing.

The eligibility criteria for licensees will be prescribed by Central Government under its rule-making powers[6]. Many jurisdictions such as Australia have stipulated financial and technical criteria for applicants. ISRO has done the same in its RFPs inviting private sector involvement, and it is expected that similar parameters will be laid down under the rules. The eligibility criteria as and when set out should promote innovation, particularly from the start-up space, without compromising on technical expertise.

Affixing liability for space disasters is a crucial aspect of the Bill. The Outer Space Treaty[7] provides that States are “internationally liable for damage to another State…or its natural and juridical persons, if such damage is caused by their space objects”. Similarly, the Liability Convention[8] fastens responsibility onto states for space objects launched from their territory, irrespective of who launched it.

Accordingly, the Bill[9] provides that a licensee shall indemnify Central Government from ‘claims’ brought against the Government in respect of any damage or loss arising out of commercial space activities or a space object covered under the licence. However, the quantum of liability will be determined by Central Government.

Transparency, particularly with respect to maximum possible liability, would be an important factor for private players seeking to enter this sector. The Civil Liability for Nuclear Damage Act, 2010, has set a precedent for a monetary cap on damages payable by an operator and similar provisions may be adopted in respect of space-related disasters as well. Jurisdictions such as China and Australia do stipulate procurement of insurance by licensees to cover such liability and the same has been followed in the Bill, whereby the licence issued will stipulate the insurance that the licensee is required to procure[10]. Similar to United States[11], India could consider adopting a tiered and capped liability structure across the entire value chain reflecting the myriad components of the space industry, together with an analysis of the maximum possible damages in each tier, so as to ensure that liability is proportionally affixed.

A robust intellectual property regime is essential to enable innovation. The Bill[12] provides that invention or any form of intellectual property rights (IPR) shall be protected in accordance with the law for the time being in force ‘with the primary objective of safeguarding national interest’. Such a qualification, i.e. safeguarding national interest, potentially renders IPR vulnerable to State action and may raise concerns for foreign parties. Further, ownership of all IPR developed, generated or created on board a space object in outer space is deemed to be vested in Central Government[13].

This is akin to the law of United States, where the title to space inventions rests with the Government – but NASA has a broad waiver policy, retaining only a nonexclusive, royalty free licence for Government use and the right to step-in if the contractor does not develop[14]. The Bill should similarly provide for a licensing mechanism (instead of ownership) or provide compensation to the private party for such IPR.

Other provisions of the Bill also raise some concerns. The term ‘Central Government’ has not been defined and hence the authority responsible for administering the Bill and the sector is unclear. Some provisions also have potential for harassment such as allowing Central Government to seek such information from a licensee ‘relating to its affairs’ as the Central Government requires[15], or permitting Central Government to take copies of documents from the licensee[16]. The Bill is also silent in respect of new opportunities such as space mining and tourism.

The recent anti-satellite missile test (ASAT)[17] has once again turned the spotlight on space and India. The Bill is a step in the right direction particularly given India’s commitment under international treaties. However, transparency in respect of licensing, eligibility criteria, liability and IPR will provide the necessary stimulus for private-sector growth in the sector.