The Old Order Changeth, Yielding Place to New – Update on Structural Reform in Space Sector

Tapan Misra

Many well wishers of ISRO, some are serving and retired colleagues, many of our citizens, justifiably proud of ISRO and its achievements, expressed reservations about my facebook post on 17 May and also the plan of Government of India towards structural reforms in space sector.

We need to examine certain broad contours of reservations and our existing mindset.

  1. ISRO is confused as sole representative of space industry.

In spite of ISRO being a jewel in Space research, ISRO cannot be solely construed as the only possible space industry in India. We should change our thought process. ISRO as best should be only a successful future entity or “co traveller “

We must aim for India to compete and grab opportunities in Space business in global scale. Let us discuss limitations of ISRO to corner a big chunk of global business. In industry, typical average annual salary is around 2- 10% of average per capita turnover of the industry. Lower bound is applicable for mass producing industry. Where as upper bound is applicable for purely esoteric industry, targeting research products in low volumes. ISRO, with its part research and bigger part of production capability, may be assumed to fall in the range of 5% bracket. Assuming average salary of ISRO employee as Rs. 5 lakhs per annum, per capita turnover of ISRO will at best be Rs. 1 cr. With 13000 employee strength of ISRO, annual turnover of ISRO will be limited to at best Rs. 13000 cr. In reality, ISRO’s annual turnover hovers around Rs. 10000 cr.

Considering a modest aim of India to corner 5% of global space business of USD 360 billion, the aim translates to annual turnover of Indian space industry to the tune of Rs. 1,25,000 Cr. If ISRO alone has to capture this business ISRO’s manpower needs to be augmented to 1,25,000 to 1,50,000. No sane Government can allow such a hike, specially when risk of managing a mammoth agency will be enormous. Only way out is to invite participation of private industry with the requisite manpower and resources to meet this tall aim.

Somehow it is being construed that, Government’s initiative to involve private co-travellers in Indian space business is a tongue in check allusion to efficiciency and effectiveness of ISRO. This perception is thoroughly wrong. What is required is blooming of many ISROs under private initiatives. Essentially to open a flood gate of inherent strengths of Indian minds, need not necessarily under state umbrella.

  1. Advantage of smaller size and focussed product

Every industry will come to a saturation point in terms of product output. Even by increasing the input resources in terms of capital and manpower, there will be hardly any increase in the output beyond saturation point. Innovation brings about a change in the stalemate scenario by making it more productive or more efficient or both. Kindly see the figure:

Innovation in business processes or manufacturing methods and strategies can improve efficiency. It means the saturation point can be achieved with lesser input resources. On the other hand, innovation on simplification of product design or bringing in more productive capital goods i.e., the more efficient machinery to manufacture the products will raise the saturation output at same or lesser resources.

However behemoth and multi focus industries like ISRO are resistant to innovations because of sheer inertia and occupation of leaders’ mind, to run the behemoth industry itself in the present avatar. My experience says that with the best of the efforts in innovation in such large industry, the conversion in product outputs are meagre to the extent of 5 to 10 percent.

For bringing substantial change in output by a factor by innovation, calls for single focus, agile and smaller independent entities. I am sure if ISRO is restructured in terms of smaller single focus business entities like payload, satellite, rocket engine production, launcher integration and launch services, tracking and satellite maintenance services, the sum of turnovers of these individual entities will surpass substantially in comparison to the same by a ISRO behemoth. The reason for improvement will be encouragement of innovation by single focus leaderships.

Many mammoth MNCs like Google, Microsoft, Space X, Boeing and many others co opt or fund or usurp innovative start ups to create and absorb innovations. In India to reach this level, we may have to wait a few more years.

  1. Discretionary vendor development vs policy based privatisation under a regulatory body

In Indian scenario, many a times, technology transfer or vendor development are viewed as private participation. In the absence of clear cut policy guidelines, such exercise becomes quite discretionary and tend to be biased towards familiarity. More often than not, private partners are burdened with older technologies which will not attract many suitable takers in rapidly changing technology scenarios.

The best way will be to define space industry environment and rules of engagement, Space laws, risk mitigation, insurance mechanisms. Then an independent regulatory body needs to be established to create a level playing field and minimise external interference.

In present scenario, ISRO is the judge, prosecutor and executioner. ISRO plans missions, defines space systems and delivers the operational products. In such a scenario, there will be temptation to tweak the system requirements to downgraded performance specifications to hide internal limitations and at the end hurting user requirements and national interest. Now in the new scenarios, users should be able to define requirements and fund the best peforning systems from among host of competitors, of whom ISRO derived units will also participate along with private co travellers, offering comparative products of varied innovations. I would like to see Tata Sky, Jio, Airtel communication satellite systems, Ministry of Agriculture controlled Radar Imaging Systems and products, IUCAA managed Venus mission. The possibilities are enormous and limited to our imaginations.

I would like to draw your attention to the fact that we Indians enjoy the cheapest data and call rate in mobile telephony and WiFi services. The credit goes to establishment of TRAI in 1997 and creation of level playing field for mobile and telecommunication service operators, breaking BSNL’s monopoly. The ultimate beneficiaries are crores of common Indians, ushering in great leap in Indian economy.

  1. Advantage of competition and Possibility of emergence of another Elon Musk in India

Monopoly in any industry and guarantee of exclusive playing field is detrimental to the industry itself. In the absence of competition, technology becomes stagnant and innovations are not encouraged, because of the fear of disturbing status quo. Lack of competition also does not incentivise emergence of capable, forward looking and risk taking innovative leadership. Many of the monopolies were established, with sagacious minds as leaders, with an aim to bring the country in the front line of strategic sectors. Unfortunately, many wise men prefer less competent subordinate and successors in order to satisfy their desire of strangle hold in the organisation when in service and out of service. This leads to gradual degradation of the leadership quality with successive transitions, leading to stagnation in technology and services.

Market forces can play a role in promoting effective leadership as the profit and expansion is the prime motivation. It leads to reemphasis of merit and leads to better innovative environment.

Classic example is NASA. In spite of stellar achievements in moon mission, voyages mission, NASA went to a lean phase in 1980s and 1990s, leading to NASA Administrator Daniel Goldin’s adoption of FBC (faster, better cheaper) principle. FBC found its grave in infamous accident of Columbia space shuttle in 2003. This led to rethinking of NASA strategy. The space shuttle programme was junked off and private initiatives were invited. Today from the ashes of junked space shuttle programme, emerged Space X, leading to spectacular and brazenly successful space programmes. Elon Musk is no doubt a genius and technology maverick. But his emergence from electric car maker to maker of Falcon 9 Heavy, taking off with 27 engines running in unison, was possible in opening up of US space programme to private initiatives.

I wish proposed structural reforms in India’s space programme will definitely bring many innovative mavericks in the space arena. Who knows another Indian Elon Musk will emerge in future from these Indian audacious star chasers, who are expected to emerge from this structural reform.

I am under no illusion that birth of a new idea is possible without accompanying pangs. There will be resistance by status quoists, there will be usurpers jumping in the band wagon, doubters will masquerade as debaters. But I am convinced that any idea whose time has come, will simply be unstoppable. I sincerely hope, The Old Order Changeth, Yielding Place to New”.

The author, Tapan Misra, is a distinguished scientist. At present he is Advisor with Department of Space. This write up, we are reproducing, has gone viral on social media.

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