India’s space economy could potentially touch $100 billion by 2040, says new global report

Already ranked among the world’s fastest-growing segments, India has the potential to grab a gargantuan $100 billion share of the global space industry, strategy and management consultancy Arthur D Little said in a report released Wednesday.

Per current estimates, India’s share in the global space economy stands at a measly 2 per cent with the government targeting a 9 per cent market share by the decade’s end.

India has witnessed significant growth, especially after the reforms announced by the central government in 2020 to enhance the private industry’s participation in the sector, with over 100 start-ups already active in diverse areas such as building launch vehicles or rockets, designing advanced satellites, working on space situational awareness (SSA) solutions to constructing application based on space technology.

Buoyed by nations’ rising allocation for the sector, higher private participation and the rise of new satellite technologies, services as well as applications, studies by leading investment banks and financial services providers such as Morgan Stanley, Citi and UBS expect the global space industry market to expand to $1 trillion by 2040 from its current $386 billion in 2021.

And given the yearly growth being witnessed in India, the country’s space economy is likely to touch $40 billion by 2040. The country’s current space market is worth nearly $8 billion, growing at a CAGR of 4 per cent in the last few years compared to 2 per cent globally.

Yet, as Arthur D Little’s report, India in Space: A USD 100 Billion Industry by 2040, has pointed out, the country could achieve a much higher share than is currently anticipated.

“India presents a very lucrative market with many opportunities for private players, and the [national space agency] Indian Space Research Organisation (ISRO) is a great ambassador for India in Space,” observed Barnik Chitran Maitra, managing partner for India & South Asia at the consultancy.

Five growth recommendations

Other than enabling policy initiatives already being implemented, the report recommends five other areas for India to grab a share of the underlying opportunity. These include encouraging mass adoption of satellite internet services to compete with terrestrial communication; leveraging existing strength in satellite and launch vehicles manufacturing and launch services to become a world leader with end-to-end competence in components manufacturing; building capabilities in areas with high commercial potential such as space mining, in-space manufacturing, and in-orbit servicing; exploring emerging activities such as space tourism and space entertainment to provide cost-effective services in the future; and innovating in ‘green space’ including sustainable fuel, reusable spacecraft, and use of eco-friendly technologies.

“Success would mean a doubling of the space Industry’s contribution to India’s GDP, from the current 0.25 per cent to 0.5 per cent by 2040, with a potential creation of more than 3 million additional jobs in the country and fuelling its GDP growth rate,” the report said.

However, this also required the country to address challenges like lack of local manufacturing capabilities for certain components especially semiconductors, inadequate funding and investor hesitancy in pursuing space opportunities, the lack of a clear and comprehensive regulatory framework covering all space activities and increasing competition from foreign players striving to become cost-effective as well, the report added.

And that won’t be possible without the combined efforts of all stakeholders from government and private industry.