The Government of Telangana released the Draft SpaceTech Framework in September 2021. This is the first time a state government has released a policy framework to encourage participation in the space sector. This Blogpost discusses our comments on the Draft Framework, which we have also submitted to the Government of Telangana. The comments highlight the need for greater detailing and clarity in certain elements of the Draft Framework.
Introduction
In September 2021, the Telangana government released the Telangana Draft SpaceTech Framework (Draft Framework). This is the first time a state government has released a policy framework to encourage manufacturing and innovation by the space sector in a particular state. We submitted our comments on the Draft Framework to the Telangana government, acknowledging the progressive thinking of the Draft Framework while also highlighting unanswered questions within it:
1. The Draft Framework encourages innovation:
a. The Draft Framework will help enable the growth of the private space sector in India, together with the policies of the central government, and create a space technology ecosystem in Telangana.
b. The Draft Framework addresses several issues that companies face today, including land for manufacturing and setting up commercial ground stations, testing and prototyping facilities, business partnerships and a highly skilled workforce for the industry. In doing so, it provides a base for the creation of specific policies for each of these issues which in turn will help grow the sector, and serve as a model for other states.[1]
2. Recommendations on policy objectives and incentives in the Draft Framework:
a. We suggest that the Draft Framework define its goals in measurable outcomes for better implementation, like the ICT Policy Framework 2016,[2] the Electronics Policy 2016[3] and the Innovation Policy 2016[4] released by the Telangana government. For instance, the Electronics Policy 2016 defines its objectives of attracting USD 3 Billion in investments, generating employment for 1,60,000 people and enhancing production to USD 7.5 Billion.[5] Such targets could be set in the Draft Framework as well.
b. The Electronics Policy 2016[6] and ICT Policy Framework 2016[7] set out different incentives for companies of different sizes, which are defined within the policies. For instance, the Electronics Policy 2016 sets out different tax reimbursement amounts for micro and small companies.[8] It is unclear whether the incentives under the Draft Framework are applicable uniformly to companies of all sizes or are differentiated, especially with policies such as land allocation and sharing of research[9] and development facilities.[10] In case they are differentiated, the Draft Framework could define companies by size. For instance, in the ICT Policy Framework 2016, the categories defined are mega investments, start-ups and Small and Micro Enterprises.[11] This could be applied to the Draft Framework.
c. The Draft Framework does not outline if the state government will be a consumer of space technology under this policy. A plan on Telangana’s adoption of space services for the government will motivate innovation because the government will be seen as a big customer for some of these services. The ICT Policy Framework 2016 outlines the usage of services of the ICT sector by the government to carry out its initiatives and functions[12], which could be done for the Draft Framework as well.
3. The Draft Framework should provide clarity on:
a. Status of foreign entities: The Draft Framework notes that the development of products and services should be local and emphasises supporting Indian innovators.[13] We recommend that the Draft Framework treat Indian and foreign companies alike. This is in line with the central government’s policies such as allowing 100% FDI in telecom, including satellite communication, and satellite launch and operation.[14] A policy that is favourable to foreign entities alongside domestic ones will also bring foreign investment and more jobs into Telangana.
b. Coordination with national institutions: The Draft Framework says that Telangana will facilitate coordination with national institutions and support entities in compliance and authorisation processes.[15] But it does not give any details on how this will be implemented. It is unclear if the state government would merely point entities to the correct regulators, help them establish contact with them, or also assist in obtaining compliance. The Telangana government can consider setting up a body with independent experts who can offer guidance on space and telecom related issues. This body can help companies with the steps to be taken to obtain government approvals and can facilitate contact with central government regulators.
c. Legal and IP assistance: The Draft Framework notes that legal and intellectual property advisory services will be offered by the state.[16] The state can compile a list of independent experts that can advise companies.
d. Enabling sharing of testing facilities: The Draft Framework mentions that the government will set up a system where ‘under-utilised infrastructure’ of academic and research institutions such as National Remote Sensing Centre (NRSC), Electronics Corporation of India Limited (ECIL), and the Defence Research and Development Organisation (DRDO) can be leveraged.[17] These are national institutions. It is unclear whether the Telangana government will create a mechanism for the use of these facilities or if it will only facilitate contact between the institutions and companies. We recommend that the government pursue tie-ups with these national institutions to facilitate the sharing of testing facilities. This can be implemented by creating a portal which aggregates the facilities offered by these institutes.
e. Role and function of the administering body: The Draft Framework provides for a separate body to implement it.[18] However, the position of the body within the Telangana government is unclear. Clarity on this will help the industry in understanding the nature of the body and its reporting structure within the government. Further, the Draft Framework notes that there will be facilitation of approvals from national regulators,[19] enabling of partnerships within the industry,[20] and skill development.[21] However, it is not clear whether this body itself will be involved in enabling these approvals and partnerships. Most of these functions will involve other departments as well, such as the Telangana Departments of Technical Education for skill development[22] and Industries for enabling collaborations[23]. The Draft Framework can define the role of the body alongside these departments, among other things.
We also recommend that the management of the body should comprise not just state administrators but also other stakeholders, including industry (including startups, large companies and investors – all Indian and international) and academia representatives. Having a governing body so represented will instil trust that varied perspectives are being heard in policy-making and implementation process.
This piece has been authored by Nehaa Chaudhuri, Partner, Anirudh Rastogi, Managing Partner, Kanupriya Grover, Associate and Rahul Krishna, Consultant.
Image credits: Freepik
[1] Page 6, Draft Framework, Key pillars where specific policy could be made are Enabling Access to Infrastructure, Business Facilitation and Collaboration, Skill Development and Training, and Promoting Research and Innovation.
[2] ICT Policy Framework 2016, Government of Telangana, https://it.telangana.gov.in/wp-content/uploads/2016/04/Telangana-ICT-Policy-Framework-2016.pdf
[3]Electronics Policy 2016, Government of Telangana, https://it.telangana.gov.in/wp-content/uploads/2016/04/Telangana-Electronics-Policy-2016.pdf
[4] Innovation Policy 2016, Government of Telangana, https://it.telangana.gov.in/wp-content/uploads/2016/04/Telangana-Innovation-Policy-2016.pdf
[5] Page 10, Electronics Policy 2016
[6] Page 14, Electronics Policy 2016 https://it.telangana.gov.in/wp-content/uploads/2016/04/Telangana-Electronics-Policy-2016.pdf
[7] Page 18, ICT Policy Framework 2016
[8] Para 6.2.1 (ix), page 14, Electronics Policy 2016
[9] Para 1.9, page 8, Draft Framework
[10] Para 1.10, page 9, Draft Framework
[11] Page 12, ICT Policy Framework 2016
[12] Pages 22-28, ICT Policy Framework 2016
[13] Para 2.6, page 11, Draft Framework
[14] Clause 5.2.14, FDI Policy in Telecom Sector, https://dpiit.gov.in/sites/default/files/pn4-2021.PDF
[15] Para 2.4, page 10, Draft Framework
[16] Para 2.7, page 11, Draft Framework
[17] Para 1.5, page 8, Draft Framework
[18]Page 6, Draft Framework
[19] Para 2.4, page 10, Draft Framework
[20] Para 2.3, page 10, Draft Framework
[21] Pages 12-13, Draft Framework
[22] Department of Technical Education, https://dtets.cgg.gov.in/
[23]Commisionarate of Industries, http://www.industries.telangana.gov.in/Home.aspx
