Unattended Blind Spot

As India accelerates its push towards increased privatisation of its Space economy, a major financial and legal vulnerability remains unaddressed—the absence of a robust third-party liability framework. With India increasingly launching private satellites of both domestic and foreign private entities, including allowing private entities to also act as launch service providers from Indian soil, it is only a matter of time before a third party liability claim arises under international law, leaving Indian taxpayers to bear the cost of damages instead of the private operator. While India has made commendable progress in streamlining approvals and enabling commercial launches, the regulatory framework pertaining to financial liability remains fragmented and lacks a comprehensive approach to the entire space mission life-cycle.

India Is One Liability Claim Away from a Crisis

Consider this scenario: ISRO or an Indian Space Startup launches a private satellite for either a foreign or domestic company, which later collides with a third country’s space asset, causing millions in damages. Such third country can, under the Outer Space Treaty of 1967 (OST) and the Liability Convention of 1972 (India is a signatory to both) bring a claim against the Government of India for compensation. India, as the launching state, would be liable to pay compensation to such third country regardless of whether the satellite was operated by a private company. This liability regime under the International Space Law is precisely why other spacefaring nations such as the United States, Australia, France etc., mandate private operators to carry third-party liability insurance for the entire mission lifecycle and to also sign a cross-waiver of liability clause to safeguard the State. Since, India is not doing so, the burden of financial liability would ultimately fall on the Indian government, and by extension, Indian taxpayers. The current space policy (being applied through the Norms, Guidelines and Procedures published by IN-SPACe) mandates insurance coverage only for the first stage of the launch and only mandates it for launch operators. This is a narrow approach that does not fully recognise India’s liability obligations under international law. As per the OST and the Liability Convention, India, as a "launching state," remains fully liable for any damage caused by space objects launched from its territory for the entire life-cycle of such space objects. This is in addition to the opaqueness of the policy which leaves everything “to be determined” by IN-SPACe such as minimum amount of insurance, insurance period, and other terms & conditions of the insurance.

In the absence of a well-defined liability regime, the Indian State could face massive financial exposure in the event of an accident that damages foreign satellites, aviation assets, or property on Earth or in Outer Space. This is in the era of an increasingly cluttered Low-Earth Orbit around us and with projects like Starlink, we would consistently be on the risk of footing the bills of damaged expensive space objects of other countries. International space law imputes liability on states that launch or procure launchings of space objects and states from whose territory or facility space objects are launched so if a private entities satellite generates space debris (due to their negligence), India would be internationally liable for damage caused by such space debris since nonfunctional state of a space object does not change its legal status.

Given such a liability regime, in the context of India’s push to become a preferred launch destination for international customers, isn’t it pertinent that we align our liability framework with global best practices or at least give more thought to it?

A Costly Reality Check: Will India Act Only After a Major Claim?

Perhaps the government will only take this concern seriously after an actual claim arises from a third country, leaving Indian taxpayers to foot the bill for a private enterprise’s mistake. But should India wait for a costly legal battle before addressing this issue? A more prudent and proactive approach would be to institutionalise a clear liability and insurance framework now.

A better way to approach this would be to have:

1. Mandatory third-party liability insurance for all space missions, covering all stages—launch, in-orbit operations, and re-entry.

2. A structured cross-waiver regime between government agencies (ISRO, NSIL, IN-SPACe) and private space entities to distribute risk.

3. A national space insurance pool (similar to India’s nuclear liability insurance model) to provide coverage for damages beyond a certain maximum threshold.

4. Incentives for private insurers and reinsurers to develop comprehensive space insurance products in India which could help bring down premium costs.

Conclusion: India Must Secure Its Space Future

As India positions itself as a global leader in space technology, it cannot afford to have a reactionary approach to liability management. The rapid commercialisation of the sector demands a forward-looking regulatory strategy. This would be win-win for both the government and the private sector as simply mandating third party liability insurance on private operators isn’t feasible, given that premium rates are very high in the Space sector. Government of India along with IN-SPACe need to enter into a dialogue with the Space Startups in India as well as insurers and come out with a more holistic and pragmatic approach to Space Insurance. A few lines, a reactionary or an approach decided in silo would not yield the results IN-SPACe is looking for. The cost of inaction is simply too high.

The writer is associated with Spaceport SARABHAI. Views expressed are personal