Right policy space for strategic industries

Last week, Skyroot Aerospace, a Hyderabad-based startup, catapulted India into the private orbital launch club, whose only other members are the US and China. The placement of 6 satellites into low Earth orbit by the company's Vikram-1 rocket is a swift response to India's decision to encourage commercial exploitation of space. Access to dual-use tech has been eased, and foreign investment has been liberalised for manufacture and delivery of payloads. India has deftly tapped into the commercial interest driving satellite and rocket tech. The immediate business case for the space sector is telecom. The country needs domestic capability in satellite-based internet services, which is predicated on efficient launch technology, such as reusable rockets.

The policy pivot in a strategic sector like space is also delivering results in two other areas - arms production, and atomic energy. Private sector armaments production now accounts for close to 1/4th of domestic output, supported by easier access to technology and capital. This effort has gained traction because GoI is also the principal buyer of privately produced defence equipment. The defence acquisition procedure has been tailored to encourage local procurement. Industrial corridors are facilitating private armaments production, although larger defence platforms, such as aircraft and aircraft carriers, remain in the public sector.

The push for private participation in nuclear energy is of more recent vintage. The sticking point was the unlimited civil liability imposed on contractors in the event of an accident, which has now been capped. This should open the door to private nuclear power plants. A clutch of domestic companies has shown interest within a year of the liability law being amended and foreign investment being liberalised. Across all three sectors, the conversation has shifted from technological capability to engineering capability. India may have found the right policy combination for developing strategic industries.