When in 2011, Gadhadhar Reddy co-founded his start-up to make carbon nanotubes – a material 100 times stronger than steel and nearly 200,000 times thinner than a strand of hair – to be sold for building rockets, the near-universal response was that this was ‘not possible’. Mr Reddy shortened this to name his company, located in the southern Indian city of Bangalore, NoPo Technologies. Eight years later, his product was declared one of the best in the world in its category.
“In India, we lack confidence,” says Mr Reddy. “If you have something out of the box, there’s huge scepticism around it.”
While India is known for its software engineers, that belief does not really extend to cutting edge space technology despite the country having a well-respected national space agency, the Indian Space Research Organisation (ISRO).
India’s space sector has so far been dominated by ISRO and the legacy companies that service it, making a range of hardware components and subsets including electronics for communication satellites and rocket engines. In the past decade or so, however, around 50 start-ups have emerged and are doing both upstream work and downstream work. The former includes NoPo, which is making highly advanced material; Agnikul Cosmos, which is building a 3D-printed rocket engine; and Pixxel, which aims to put a constellation of satellites in space to collect data. In the downstream area, start-ups such as Numer8 and SatSure use data from satellite images for actionable intelligence for sectors including fisheries, agriculture and climate change mitigation.
The market opportunity of the global civil and commercial space market is already valued at about $371bn, according to a December report by consultancy PwC, a prospect that the government is finally recognising.
In March 2019, it set up NewSpace India Ltd (NSIL) to be ISRO’s commercial arm, tasked with transferring technology for small satellites to the private sector and manufacturing launch vehicles for them in collaboration with the industry, among other things. In February 2021, the government allocated close to $100m to it, despite concerns in the industry this could give rise to conflicts of interest and that instead it should give grants directly to start-ups.
In another policy move, in June 2020 the government announced a single window nodal agency under the department of space, to facilitate and regulate space activities as well as the use of ISRO facilities by private sector businesses – a massive cost saving, especially for start-ups.
Known as the Indian National Space Promotion and Authorization Centre (IN-SPACe), it aims to help them build launch vehicles and satellites, enable sharing ISRO’s technology and facilities and help them register and operate spacecraft, an otherwise complex and time-consuming process. The move is applauded by many as a step in the right direction even though it is yet to appoint people to get the job going and is currently operating in an ad-hoc manner with personnel from ISRO, NSIL and the department of space.
“We have the talent to be among the best in the world,” says Susmita Mohanty, spaceship designer and serial space entrepreneur and a mentor to many of the new generation of space start-ups. “We need to encourage the private sector, we need progressive policies.”
Ms Mohanty, who started India’s first private sector space start-up in 2009 and who has previously closely worked with the space programmes of Europe and the US, says another reason to build up the private space sector is that those start-ups will not only bring in innovation and disruption, giving the country a competitive edge, but will also help propel the economy and create jobs.
With no real government policies in place in 2011 to help start-ups or encourage investments, NoPo’s Mr Reddy raised Rs12.5m ($172,000) from his relatives to get started. The limited funds forced him to use that smartly: for instance, by buying expensive components such as valves, fittings and connectors on eBay’s US version, where the products were both reliably genuine and cheaper than on its Indian site.
In 2018, Pawan Kumar Chandana and Naga Bharath Daka, two young ISRO scientists armed with $1.5m seed funding from fashion e-commerce Myntra founder Mukesh Bansal, started Skyroot Aerospace in the southern city of Hyderabad. Their aim is to launch rockets to carry small satellites for companies that want earth images or to launch communication services. They had been introduced to Mr Bansal who is a space enthusiast and who met government officials as part of his due diligence before handing over the cheque to Skyroot, says Mr Chandana. “Thanks to that, capital was not an issue for the first one to one-and-a-half years,” he adds.
In February 2021, Skyroot tied up with Bellatrix Aerospace, which makes vehicles to transfer satellites in orbit. The initiative is similar to making a ‘last mile delivery’, as for some flights Skyroot will carry the satellites of potential clients into space and once there, Bellatrix will ensure they get to where they need to be.
Other investors are starting to take notice. In May 2021, Skyroot raised $11m in a series A round – led by the cofounders of Greenko Group, one of India’s largest renewable power companies – and included India-listed space and defence supplier Solar Industries.
In the same month, Chennai-based Agnikul Cosmos, which in 2022 plans to launch a small rocket where the entire engine will be fully 3D printed in one go, also raised $11m. The round came on the heels of a $3.5m pre-series A in 2020. Agnikul co-founder Srinath Ravichandran credits at least some of the investor love for its latest round to the recent IN-SPACe policy. His start-up aims to make rockets and launch satellites for clients within a couple of weeks, unlike the four to six months needed in the conventional process, and at close to a quarter of the cost of the latter. The firm has signed up with IN-SPACe to use ISRO’s testing facilities for its processes.
While Mr Ravichandran calls IN-SPACe “awesome”, his one request for the government to really help businesses get off the ground would be to place sample orders as “that really helps provide validation in the market”.
NoPo’s Mr Reddy has another request. Currently, the rules allow government agencies to buy advanced technology from a single vendor. And while they have used that rule to buy from foreign vendors, they have rarely used it for Indian vendors for fear of accusations of favouritism by government auditors. This hurts domestic start-ups, says Mr Reddy, who wants that policy to be tweaked so the bureaucrats can place orders fearlessly with Indian companies as well, thus levelling the playing field.
This article first appeared in the June/July print edition of fDi Intelligence. View a digital edition of the magazine here.