India's Spacetech Stocks in the Making 

The Space Age began in October 1957 when the USSR launched the Sputnik satellite.

As per European Space Agency estimates, since then, nearly 15,000 satellites have been put into orbit.

But here is the kicker. Anywhere between 70,000 to 100,000 satellites will be launched in the next 15 years. And over 80% will be small satellites weighing less than 500 kg.

In 2022, the Indian Space Research Organisation (ISRO) turned 50.

The institution's R&D activities over last 5 decades were reasonably secretive, if not obscure. They were certainly not in the realm of commoners like us to track.

So, space related commercial activities were almost unthinkable. But in the last few years, things changed. And dramatically so.

Most of the changes germinated in the space startups.

But how many private Spacetech companies have you heard of apart from SpaceX?

Well, if you haven't heard of many, be prepared for it now.

For instance, in 2018, two undergraduate students at BITS Pilani were working on artificial intelligence project. They faced a problem. Their analysis was handicapped by the lack of high-resolution satellite imagery data.

They soon realised there is a market for a satellite company to offer high-resolution imagery data. This was the start of Pixxel Space, a space tech startup which offers high resolution satellite imagery.

Dhruva Space founder Sanjay Nekkanti's obsession with satellites began when he was still in college. The country was basking in the success of Chandrayaan-1, India's first moon mission. The space programme had generated a lot of interest among students.

ISRO decided to tap into this frenzy and asked universities to encourage students to build satellites. It offered to deploy the student satellites in orbit for free.

Chennai's SRM University was among the earliest to take up this offer. Nekkanti, who was pursuing a bachelor's degree in electronics and telecommunication joined the team of students. The student-made satellite, SRMSat, was designed to address pollution in the atmosphere. It was launched into orbit by ISRO in October 2011.

Eventually Nekkanti realised his spacetech ambitions by setting up Dhruva Space in 2012.

The company now offers end-to-end services-building satellites, launching, tracking and maintaining them. By 2022 it had raised US$ 8 million in funding. Also, it has orders to put three satellites in space. Many foreign entities are in talks with Dhruva Space to build and launch their satellites.

Apart from Dhruva, a clutch of space startups, including Agnikul Cosmos, Skyroot Aerospace, Digantara and Pixxel, are building and launching rockets, engines, as well as satellites. There are meant to accomplish everything from generating high-resolution pictures of earth to tackling space debris.

As expected, they have investors making a beeline for Indian spacetech.

Whether or not Spacex comes to India, the Indian space tech ecosystem is large enough to attract billions in funding and innovate to make India a commercial space tech hub.

Mind you, the spacetech ecosystem is brand new and much bigger than that of electric vehicles.

But what's powering this transformation?

It's the work done by ISRO and the Indian National Space Promotion and Authorisation Centre (IN-SPACe), the nodal agency for promoting and regulating private players in the sector.

They have achieved a first-of-its-kind alignment between a government body and the private sector. ISRO, since its inception in 1969, has developed a network of 400-plus vendors-including Hindustan Aeronautics Ltd, Larsen & Toubro, Godrej & Boyce, Alpha Design Technologies and Centum Electronics-that specialise in tech development, manufacturing and supply of components.

The push for start-ups in the space sector is part of ISRO's vision to expand private players' participation in the sector by enabling companies that can develop end-to-end solutions to grow.

Some of the most important developments took place in 2020 when the commercial space sector was opened up for private players. This was followed by the creation of IN-SPACe, and the release of draft policies on remote sensing and satellite communications.

So, the key catalyst for the Spacetech sector was the launch of Indian Space Association (ISpA) in 2021. Its founding members included L&T, Tata Group, MapmyIndia, Walchandnagar Industries, and Bharti Airtel’s OneWeb.

As per Indian Space Association (ISpA), the investment in India space startups has grown at a compounded rate of over 94% since 2016.

Another positive is that the global perception about Indian spacetech start-ups is changing. India always had a good reputation concerning space, but it was limited to ISRO. What has changed now is that people are confident that other companies will also be able to deliver because India already has that expertis. Also there is a willingness on the part of the government and ISRO to not only work with private players but also look at them as operators in the ecosystem.

While upstream in the space sector is about sending objects such as rockets and satellites into space, downstream utilises the research and data generated by upstream in a range of applications. Industry experts like Lt Gen. (Retd) Anil Kumar Bhatt, Director General of Indian Space Association (ISpA)-point out that a significant portion of growth opportunities lie in the downstream sector.

According to him, the largest percentage of opportunities in the sector will be in applications. There is no line to draw there since that includes everything from communications, health, education, and mining to intelligence, surveillance and reconnaissance (ISR) for the armed forces...

Although rockets and satellites are the core, they only form a minuscule percentage of the space economy. As the cost of data decreases and the types of data increase, various spacetech applications critical to diverse industries and governments will evolve. That also means that the sector will need more people with skills to turn upstream research into downstream applications.

According to a joint study by E&Y and ISpA in 2022, with a 36% share, the satellite services and applications segment will form the largest share of India's space economy by 2025,. The report projects the country's space economy expanding to $13 billion in 2025, with the space launch segment growing at a CAGR of 13 per cent by that year. This will be further spurred through enhanced private participation, the latest tech and low cost of launch services. Moreover, the country's satellite manufacturing capability is expected to be worth $3.2 billion by 2025 from $2.1 billion in 2020.

IN-SPACe is in discussions with two state governments to create a manufacturing hub to incentivise the setting up of satellite production facilities as well as providing technical assistance,

So... since 2021 India's space sector is witnessing its post liberalisation phase.

And if you invest well, there could be significant wealth generating opportunities.

They could, eventually, be massive wealth creators just like Defence stocks have been since 2019.

Now, unlike the defence sector which already had multiple listed stocks, with credible financials, most space tech startups are yet to mature. Hence, as an investor you need to be patient to ride the boom.

In the meanwhile, you could consider some key technology associates of the blooming spacetech startups.