Last week, the Union government’s Department of Science and Technology (DST) signed an agreement with a private space firm, Agnikul Cosmos, for extending financial support of Rs 200 crore under the Research Development and Innovation (RDI) Fund for the development of a reusable launch vehicle or rocket. The idea is to recover from space not just a part of a rocket after the launch but to make the rocket fully reusable. The technology is aimed at reducing launch and manufacturing costs greatly, and minimising the generation of space debris.
Developing a reusable launch vehicle (RLV) is a complex challenge, involving a slew of technologies to support controlled descent and recovery, propulsion systems for restart and deep throttling, as well as critical capabilities for descent and landing operations. That’s why RLV development remains the Holy Grail of the space industry.
The move comes on the heels of reports from China and Japan. In July, China demonstrated reusable rocket technology by recovering the first stage of its Long March 10B rocket after it placed a satellite in orbit. The rocket was designed to return to Earth through controlled descent at a sea-based recovery platform.
This has made China only the second country, after the US, to have achieved a vertical landing of an orbital-class rocket. SpaceX, founded by Elon Musk, has performed dozens of such landings, bringing down the cost of space transportation.
A few days after China, Japan conducted the first experimental flight of its RLV prototype developed jointly by the Japanese space agency and Mitsubishi. This is a precursor to a bigger project to develop a single-stage reusable rocket in collaboration with French and German space agencies.
India has been alive to the need of developing its own RLV for a long time. The RLV project of the Indian Space Research Organisation (ISRO) was approved in 2012, and since then, several technologies like autonomous landing, supersonic flight and powered cruise flight have been developed and evaluated. ISRO’s RLV is a winged vehicle like the now-retired space shuttle of NASA. It looks similar to an aircraft but combines the complexity of both a launch vehicle and an aircraft. In 2024, RLV was given a name — Pushpak. Agnikul’s rocket is called Agnibaan.
The quantum of assistance (Rs 200 crore) extended to Agnikul may give rise to an impression that the government, perhaps for the first time, is supporting a private company in direct competition with a government R&D entity engaged in a highly strategic and globally competitive technology area. Such aid need not automatically imply that ISRO’s RLV project has not been adequately backed (it gets milestone-based funding) or will get a lower priority after the government support to Agnikul.
In any case, a comparison of the two RLV projects is not fair because they follow two different technological architectures. ISRO’s RLV is a winged spaceplane (to be propelled into space by a rocket which may or may not be reusable) and Agnikul’s RLV is a reusable vertical take-off and return rocket. The end use of the two vehicles may also differ. Still, the government should make it clear that it has no intention of deprioritising ISRO’s RLV project, particularly in view of the concerns raised by scientists’ unions about the entry of the private sector.
While the government has taken a balanced approach by funding two parallel projects in a deep tech area of national importance, the manner in which these investments are executed is equally critical. Agnikul is not the only private project to have received such a level of government funding. Last week, two more agreements were signed for providing sizeable financial support. GalaxEye Space Solutions of Bengaluru will get Rs 63.84 crore to develop a multi-sensor satellite with extremely high-resolution imaging capability. Ubifly Technologies gets Rs 285 crore in financial support (out of the total project cost of Rs 570 crore) to develop a small electric plane to be used as an air taxi.
In most of these projects, the government funding accounts for nearly 50 per cent or more of the respective project costs. If the funding is given by way of equity, the government would be a majority shareholder in these startups and thus have a say in their governance. But the government support is being given in the form of Optionally Convertible Debentures, in which finance is extended as debt with an option to convert it into equity.
Private companies are answerable to their investors and shareholders and not necessarily to the government, even though it may have extended the seed money in the form of debt. Mergers, acquisitions and technology transfer for the sake of profit-making are normal in the private sector. If a strategic technology is developed using public funding extended by DST and the company gets taken over by a multinational or a bigger rival, then the very purpose of developing strategic capability with public money would be lost.
This is not a hypothetical situation — it happened with vaccine development in the late 1990s. The Technology Development Board of the DST, the entity which is funding Agnikul and Ubifly, funded biotech startups to break the monopoly of multinational vaccine suppliers. With liberal grants from the DST for R&D, two Indian companies could successfully drive down Hepatitis vaccine prices globally. However, soon thereafter, one of the two vaccine firms supported by the DST was taken over by a competing multinational company, and the DST or the government could do nothing about the transaction. In effect, public funding was used to build a capability in a critical area which ultimately landed in the hands of a multinational vaccine company.
Let’s not end up in a similar situation in the deep tech sector. The government must put in place necessary checks and balances wherever it is committing public funding to private projects. The stakes are high both in terms of the level of funding and the strategic importance of the technologies involved.
