The Indian government is setting up a sector specific investment fund for space startups in the country. This signals continued focus and strong political will. However, government as a customer is better than the government as an investor. I write for the Print in this opinion piece:
… The space sector is highly capital-intensive, and the Rs 1,000 crore proposed by the government is insufficient to satisfy the funding needs of space startups.
… The government would be better served by using the Rs 1,000 crore fund to enable the purchase of more such services from the private space sector in India.
Having the government as an anchor customer provides a stable source of demand for space-based services, reducing uncertainties in the market. It will boost the industry and increase investor confidence in the Indian space sector, which can draw in more investments from home and abroad. It will also induce healthy competition among companies, enabling only the best to win government contracts. Finally, such an approach incentivises innovation, efficiency, and overall success among Indian space startups.
… NASA’s Commercial Orbital Transportation Services (COTS) programme is an excellent example of how this government procurement model yields favourable outcomes for all stakeholders. In 2004, the US government announced that its space shuttles would be retired due to high costs and safety concerns. The COTS programme was started in 2006 to replace the space shuttles.
Under the COTS programme, companies had to achieve certain milestones to avail payments, ensuring the funds were linked to performance and progress. The risk was shared between the companies and the government, rather than the government bearing all the risk with upfront investments.
The programme was a success. SpaceX’s Falcon 9 rocket and Orbital Sciences Corporation’s Cygnus spacecraft were developed under COTS. SpaceX completed a cargo delivery demonstration in 2012, restoring the American ability to resupply the International Space Station (ISS).
Read the full article here: https://theprint.in/opinion/govts-rs-1000-cr-fund-for-space-sector-has-drawbacks-it-should-bet-on-outcomes-not-ideas/2222314/