The Space Activities Bill, 2017 (the Bill) was introduced to boost commercial activity in the space sector and to encourage the sector’s development through a dedicated regulatory framework. In the absence of a dedicated legislative framework, the Department of Space (DOS) regulated the sector through internal policies, guidelines and frameworks, which was believed to be inadequate to regulate private entities seeking to participate in the sector. Coupled with this was the need to give effect to India’s obligations under international law, particularly the Outer Space Treaty, 1967 and the Liability Convention, 1972, which obligated India to enact a legislation governing space and crystallise its obligations thereunder. The Bill was, however, never enacted, on account of strong industry opposition to certain of its provisions.
The government has recently announced that a fresh draft of the Bill will soon be introduced with a view to establishing a dedicated legislation governing India’s space sector. Given the significant developments in the sector since 2017 – specifically, the establishment of IN-SPACe as the single-window authorisation and oversight body and the growing participation of private players, questions arise regarding the necessity of a dedicated space legislation and the industry’s expectations from the revamped Bill.
In the decade since the Bill was introduced, India’s space sector has seen significant regulatory and legislative change. To enable private participation across different activities, the government established IN-SPACe as the nodal regulator under the aegis of DOS. The norms, guidelines and procedures issued by IN-SPACe, together with ISRO’s requests for proposals and technology transfer programmes, attracted significant private participation in the sector. The revamped foreign direct investment policy and the Indian Space Policy 2023 opened up the sector to foreign investment, enabling private participation in end-to-end space activities. An overarching legislation is therefore of greater importance than in 2017.
While the current policy and regulatory framework have fared well in promoting the sector’s development, there is a heightened need for legislation. As the number of players grows, legislation is needed to bring transparency to the sector. For instance, IN-SPACe currently grants all approvals on a case-to-case basis. However, legislation should lay down specific criteria for granting or rejecting applications, thereby ensuring fairness and transparency. It should also introduce a dedicated redressal mechanism for issues arising from activities in the sector, which is currently absent from the regulatory framework.
{{/usCountry}}While the current policy and regulatory framework have fared well in promoting the sector’s development, there is a heightened need for legislation. As the number of players grows, legislation is needed to bring transparency to the sector. For instance, IN-SPACe currently grants all approvals on a case-to-case basis. However, legislation should lay down specific criteria for granting or rejecting applications, thereby ensuring fairness and transparency. It should also introduce a dedicated redressal mechanism for issues arising from activities in the sector, which is currently absent from the regulatory framework.
{{/usCountry}}As the revamped Bill is being finalised, it is crucial for the legislature to identify, understand and incorporate the sector’s key requirements and concerns in the revamped Bill.
The Bill defined space activity as the launch, use, operation and guidance of a space object, together with all connected ancillary functions and required a licence for each of these activities. The effect of this broad definition was that even a remotely connected entity, involved in a project in limited manner, would need a license and would have to comply with the attendant regulatory obligations. Further, drones and satellite communication are growing at a rapid pace, requiring a clear delineation of space to demarcate regulatory authority over different kinds of activities in the sector.
The revamped Bill should therefore categorise activities in the sector and calibrate licensing requirements and regulatory obligations to the criticality of each activity: A propulsion manufacturer of a satellite component should not bear the same procedural obligations as a satellite launcher itself. The legislature can take cue from the FDI policy’s sub-classification of space activities, which sub-categorises activities based on their criticality and sensitivity. This would enhance the ease of doing business and even offer greater clarity to prospective foreign investors.
The Bill required a license holder to indemnify the government for any damage or loss arising out of a commercial space activity, with the quantum of liability determined by the government on a case-to-case basis. This uncapped liability had a chilling effect on private entrants.
In lieu of an omnibus liability clause, the Bill should grade liability by the nature of the activity: A launch operator should face greater liability exposure than a component manufacturer. The government can limit liability exposure by mandating insurance cover up to a specified amount calibrated to the activity undertaken and, taking cue from the SHANTI Act, by prescribing a statutory ceiling of liability above which the government bears the loss, in line with its obligations under international law. A similar approach is adopted by the US, South Korea and the UK. This would allow private entities to participate without the fear of uncapped liability.
IN-SPACe is finalising a policy framework requiring launch operators to take third-party insurance for damage caused by a launch activity, covering both launch vehicles and payloads. This is a progressive approach to liability management for the Government and the private sector alike. However, given the cost of private insurance for space entities engaged across the value chain, such cover should be extended to all entities involved in the sector.
The case for a dedicated space legislation is stronger today than it was in 2017. With IN-SPACe established, the FDI policy liberalised and private players active across the value chain, the sector now needs transparency, predictability and liability certainty that only legislation can provide. This requires the Bill to be significantly redrafted to account for the regulatory and policy developments that have occurred since 2017 and the expectations of the sector. This would promote private participation and foreign investment in the sector, which are crucial for the sector’s development.
(The views expressed are personal)
This article is authored by Sanchit Agarwal, partner and Divyanshu Sharma, associate, Khaitan & Co.