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Space department nixes Hughes plan in thumbs down to Digital India

Even as the Narendra Modi government promotes Digital India and private investments in defence production, it remains wary of non-government players in the satellite communications (satcom) sector. Recalling the Antrix-Devas imbroglio of 2010, the PM-headed department of space (DoS) is learnt to have expressed reluctance to expedite an application of the US-headquartered Hughes Network Systems to invest around $500 million for establishing and operating a satellite system in India.

Hughes’ application for building and operating a KA-Band satellite to cater exclusively to India was taken up on Tuesday by the inter-ministerial committee set up last month to fast-track investment proposals from the US in India. However, the DoS, once bitten by allegations it had given away 70 MHz of valuable S-band spectrum to Devas Multimedia at a throwaway price, is twice shy and opined that Hughes’ proposal may be put in limbo.

The DoS view is despite the change of regime at the Centre. “The space department seems to have gone into a shell after the Antrix-Devas episode,” an official privy to the development said.

Ahead of US President Barack Obama’s visit to India, there is an effort to remove hurdles to investment proposals by US companies in India.

Hughes’ application proposes to invest in a new-generation “high throughput satellite” and support the government’s Digital India programme. The application is in accordance with the government’s satellite communication policy that permits private Indian registered companies (including with foreign investment) to set up Indian satellite systems subject to prior government approval. Currently, 74% foreign direct investment is permitted in the establishment and operation of satellites.

Satellite broadband technology — especially high throughput satellites — will cover every village in the country and provide reliable and affordable broadband services to all unserved areas (those not covered by fibre and wireless technologies) as well. The technology can effectively support the twin objectives of ensuring education and health services countrywide.
Industry sources said while the Antrix-Devas deal did not involve private investment in creating infrastructure or technology transfer to India, Hughes proposes to bring in significant investment to create infrastructure and bring in new technology.

Experts said a major factor that can make the Digital India initiative successful from a timely implementation perspective is broadband connectivity. While terrestrial technologies (mainly fibre and wireless) are effective, they are significantly time consuming, especially in the context of reaching hundreds of thousands far flung villages all over the country. Technology such as high throughput satellites will help faster broadband deployment in a ubiquitous manner, they said.

Companies including Hughes have been pushing for entry of more private players in the satellite industry by challenging the monopoly enjoyed by the Indian Space Research Organisation (ISRO). They have also questioned the space department’s dual role of being the regulator and service provider, saying it leads to serious conflict of interest.
These firms claim that while genuine investors who are willing to invest in the country are being kept out, other foreign satellite operators who are not investing in India are being encouraged and called in to meet the shortage of capacity due to ISRO’s failure to meet the demand.

According to ‘India Satcom Market Report 2014′, foreign satellite operators (such as Singtel, Intelsat, SES, Asiasat, Measat, Thaicom and APT) currently satisfy around 57% of total regular commercial demands in the Indian satcom market, while ISRO meets only 43% of the requirement.

Industry sources added that in the absence of adequate capacity on ISRO/DoS satellites, DoS (through Antrix) has actively been leasing capacity on foreign satellites to meet local demand as is evident by the requests for proposal for transponder capacity issued by DoS recently.

Cautious approach
* Hughes proposes $500 m investment to create satellite communications infrastructure
* Hughes’ high throughput satellites to help faster broadband deployment and back Digital India
* Department of space wants to go slow on the proposal, given the Antrix-Devas episode during the UPA regime
* Foreign satellite firms satisfy 57% of Indian satcom market’s total demands
* ISRO, the lone local satellite manufacturer, meets only 43% of domestic requirement.

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