Space Market Report: India, Japan, Brazil 19 March 2021

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Report Introduction

• This report provides a review of space programs across India, Japan, and Brazil

• The report draws heavily on the following Janes products and has been tailored for NHADEC and its membership:

• Market Reports for India, Japan, and Brazil • India, Japan, and Brazil - Defense and Civilian Space Agency Budgets • Janes articles • Markets Forecasts

The report is meant to guide NHADEC members with data, visualization, analysis and insights to support future business development decisions.

Executive Overview: India

India has demonstrated advanced space capabilities since the Cold War. Its self- reliance in space technology is a source of national pride, as well as essential to its national security interests.

India has a pragmatic approach to space: it goes alone when it must but opens its market where it can to foreign partners.

Recent achievements to date– developing its own GPS satellite system, a planned mission to Mars, and space launch vehicles–have been government-led and driven by a self-dependent approach.

U.S. space technology exports to India suffered after the jurisdiction of space exports was transferred from the Department of Commerce (EAR) to the State Department (ITAR) in 1999. Market opportunities declined in the first decade following that.

U.S. efforts in 2010 to reform export controls given the growth in the commercial space sector have opened some market opportunities. India’s importance to U.S. geopolitical interests is reflected in the US Indo-Pacific strategy and addition to Commerce’s Strategic Trade Authorization (STA) Tier 1 status in 2018.

In line with its “Make in India” initiative India has promised to open its space industry to the private sector, offering a “level playing field” for companies in satellites, launches, and space-based services. This suggests the possibility for foreign companies to partner Copyright © 2021 Jane's Group UK Limited. All Rights Reserved. with local Indian firms. 4

Historical Milestones of India’s Space Program

1962 1975 1979 1980 1984 1997 Space First First earth First First manned First satellite program satellite observation indigenous space mission launched using founded launch satellite satellite (part of Soviet indigenous polar launch mission) satellite

1999 2001 2004 2007 2016 2019 U.S. places First “high Partners Initial India joins India ITAR resolution” with Russia operational Missile conducts restrictions (<1 m) on capability of Technology first anti- on satellites, imaging GLONASS indigenous Control satellite exports to satellite navigation GAGAN Regime (ASAT) India fall system navigation (MTCR) missile test system

US-India Strategic and Defense Trade Relations

As the world’s two largest democracies, India and the United States share common interests in ensuring global security, countering China, and promoting democratic principles, trade, investment, and people-to-people ties (with an Indian diaspora of close to 5 million living in the US).

In March, President Biden held his first meeting with Prime Minister Modi online, along with the leaders of Japan and Australia, which combined form the “Quad”-- a four-country group that is seen as a counter-weight to China’s growing military and economic influence in the Indo-Pacific region.

Bilateral defense trade relations remain strong and are expected to grow. In 2016 India received the status of a “Major Defense Partner” by the United States. In keeping with this, in 2018 India was elevated to Strategic Trade Authorization (STA) Tier 1 status, which allows U.S. companies to export license-free to India a wide range of military and dual-use technologies regulated by the Department of Commerce.

In September 2020 India and the U.S. held its bi-annual Defense Technology and Trade Initiative (DTTI) meeting, focused on broadening the defense relationship and identifying co-production and co-development projects for military equipment. Near-term DTTI projects include: air-launched small unmanned systems, light weight small arms technology, and intelligence-surveillance targeting and reconnaissance (ISTAR).

India’s external political and trade relations

China: India aims to counter China's regional influence. India-China relations have deteriorated since border disputes along the Line of Actual Control in May 2020. Borden tension is likely to continue. However, statements from both countries indicate little intent for deliberate military action. Remote sensing and satellite communication capabilities are key to monitoring India’s contested borders with China and Pakistan.

Regional South Asia: Indian relations with Pakistan consistently remain difficult, with bilateral ties threatened by the August 2019 constitutional changes affecting Indian-administered Kashmir. Regionally, India is seeking stronger ties with Bangladesh, the Maldives, and Sri Lanka.

Trade Relations: India’s top major trading partners as of 2019 are: the United States (16.6% share of exports); United Arab Emirates (9.2%); China and Hong Kong (9.1%); Singapore (3.3%); and the UK (2.7%). India’s top export commodities include refined petroleum products, chemicals, and pharmaceutical products, while its major import items are oil & gas mining products, mining of metals and basic chemicals, and semiconductors.

India imported last year approximately $35 billion in goods and services from the United States– the second largest source of imports following China ($68 billion). Aircraft & spacecraft was India’s 10th largest import category in 2020, representing 3.2% of India’s total imports, or $10.9 billion. The US government approved approximately $1.04 million in ITAR-controlled spacecraft (ITAR Category XV) articles and technical data to India from the U.S. during fiscal years 2017-2019.

Make in India Policy India’s procurement priorities are closely linked to its ‘Make in India’ program, an initiative launched in 2014 intended to boost local capability and, ultimately, reduce dependency on imports, including in the defense and space sectors. While the Indian MoD discontinued the policy of requiring offsets in government-to-government trade, the MoD is very unlikely to procure space-technologies from foreign suppliers who do not have strong industrial and collaborative links with local partners. MoD has prioritized local defense production. Given India’s relatively low level of industrial capability, however, it is likely to be several years before these objectives are achieved. Make in India focuses on 25 priority sectors, including space. In March, the Department of Space announced the creation of the Indian National Space Promotion and Authorization Center (IN- SPACe) to “promote, handhold, regulate and authorize space activity by private sector which will result in enhanced private participation.” In keeping with this goal, the budget for the Department of Space, which includes its main civilian space entity ISRO, for 2020-2021 grew approximately 8% to USD 1.8 billion compared to the previous year.

India’s Space Programs and Recent Developments

India’s declared policy that its space programs are non-aggressive and do not involve an anti‐satellite (ASAT) program, was contradicted in 2019 when India successfully test-fired its first ASAT missile to destroy one of their own satellites in space (see picture on left).

That year the same two entities that performed the ASAT test-- the Indian Space Research Organisation (ISRO) and the state-run Defence Research and Development Organisation (DRDO)-- launched the first reconnaissance satellite developed to detect enemy radar and gather communications intelligence.

ISRO, which falls under the Department of Space, launched in 2013 the first seven of 11 Indian Regional Navigation Satellite System (IRNSS) satellites, three of which will domestically provide the Standard Positioning Service for civilian use and four of which will be used for encrypted and restricted service to the military.

India is improving its C4ISR capability by developing the IRNSS as an alternative to U.S.‐controlled GPS, access to which is not guaranteed in all circumstances.

Overview: India’s Launch Vehicles

India has two operational launch vehicles: Polar Satellite Launch Vehicle (PSLV) and Geosynchronous Satellite Launch Vehicle (GSLV).

GSLV family comprises the GSLV Mk II (a medium-lift category expendable launch vehicle) and GSLV Mk III (a heavy-lift launch expendable launch vehicle). Both are developed by ISRO.

The GSLV Mk III makes maximum use of technologies used by the GSLV and its predecessor, the PSLV.

The GSLV Mk III has been identified for ISRO’s Gaganyaan mission, which is to send a three-member crew to space for a period of five to seven days by 2022.

Market Forecast: Space Systems India’s demand for civil and dual-use space command & control, SatComm terminals, bandwidth, and payloads (see left), is expected to grow steadily from 2021-2030-- An estimated total of at least USD 2 billion in projects through 2030.

Some specific opportunities Janes identified:

• USD 200 million program to introduce a new generation high-throughput communication satellite (HTS) for provision of high speed/capacity services across the country. The military will also likely require a dedicated HTS program to provide similar levels.

• In June 2018, Indian Navy placed a USD 200 million order with ISRO for a dedicated military satellite, known as GSAT 7R, for communications between warships, aircraft and shore-based units.

Space Sector in India: Key Players

Indian Space Research Organisation (ISRO) www.isro.gov.in • India’s national space agency, reports to Department of Space, oversees the implementation of the Indian space program, promotes the development and application of space science and technology

Antrix Corporation www.isro.gov.in/about-isro/antrix-corporation-limited • Promotes and market products offered by ISRO; specializes in spaceborne platforms and space services

NewSpace India Limited www.nsilindia.co.in • Under the Department of Space and serves as commercial arm of ISRO. Mission is to scale up indigenous commercial space technology base through technology transfer; also caters to emerging global commercial small satellite launch service market

Godrej Group www.godrej.com/aerospace-and-defence • Supplies airframe sections for the BrahMos cruise missile and satellite launch vehicles

Executive Overview: Brazil

Brazil’s harbors large ambitions for enhanced commercial space partnerships, including with the United States, but they’ve often not translated into reality. Acquiring robust space capabilities and industrial capacity is a priority for Brazil’s national defense strategy. Brazil offers commercial space opportunities in: suborbital and orbital launch operations, satellite constellations, launch vehicle development, and use of its space launch center (Alcantara, see picture on left). The 2019 signing of the U.S.-Brazil Technology Safeguards Agreement (TSA) offers the potential for launch activities for U.S. companies.

U.S.-Brazilian trade is strong despite recent tariff disputes. U.S. export control and technology transfer concerns over sensitive items, however, remain an issue.

National Defense Strategy: Brazil’s Space Priorities

Brazil’s national space priorities are highlighted in its 2020 revised National Defense Strategy, which calls for the participation and coordination among the Brazilian Air Force, its civilian space agency (AEB), and the larger industrial and technological base, along with international partners, with the following tasks:

a) develop solutions for satellite launch vehicles and associated technologies that allow use of space platforms for communication, land observation, surveillance, weather, and navigation;

b) increase associated skills for the design, manufacture and integration of space platforms (satellites), to meet defense and other government demand;

c) seek innovative solutions for telecommunications and earth/space linkages, and

d) promoting international cooperation in areas of conception, design, development and operation of space systems, with a view to accelerating the acquisition of scientific and technological knowledge.

Brazilian Space Programs: Budget and Priorities

Brazil retains a long-term strategic goal of developing its aerospace and defense industry, which has seen it make use of defense offsets. Historically defense spending has largely remained between 1.4% and 1.6% of GDP.

The Federal Government proposed a defense spend of BRL 116.1 billion (approximately USD 21 billion) in its 2021 budget, including BRL 2.2 billion (USD 400 million) for MoD space systems. On the civilian side is the Brazilian Space Agency, or Agência Espacial Brasileira (AEB), headquartered in Brasilia. AEB falls under the Ministry of Science, Technology, Innovations and Communications (MCTIC), which is led by Marcos Cesar Pontes (picture left), a NASA- trained astronaut.

The AEB’s budget as a percentage of GDP size is small compared with other countries with similarly ambitious space programs. AEB’s 2019 budget was just USD 47 million, while the Japanese space agency’s budget was around USD 2 billion and India’s USD 1.7 billion (NASA’s FY20 budget is around USD 22 billion).

US-Brazil Strategic and Defense Trade Relations

Brazil is a key hemispheric strategic partner of the United States. They have mutual interests in expanding trade, combating COVID, promoting democracy in the region, and responding to challenges with Venezuela.

The United States is Brazil's second-biggest trading partner (after China), exporting to Brazil in 2019 over USD 42.9 billion in goods. Brazil was the United States' 9th largest goods export market in 2019. Top U.S. exports that year include mineral fuels ($12 billion), aircraft ($7.0 billion), machinery ($4.9 billion), electrical machinery ($3.4 billion), and organic chemicals ($2.0 billion). Disagreements with the U.S. over tariffs and quotas on aluminum and steel soured bilateral trade relations during the Trump administration.

US-Brazil Defense Industry Dialogue (DID): Led by the Department of Commerce, this has been a premier forum to bring together industry and government officials to develop defense products that could mutually benefit Brazil and the U.S. Inaugurated in 2016, one of the DID’s working group focused on space cooperation and reducing regulatory impediments, including export controls, in this area. It is unknown whether the DID will continue this under Biden.

In 2018 the U.S. and Brazil signed a Space Situational Awareness (SSA) agreement, which allows information sharing of over 23,000 objects in orbit, including Brazil’s satellites.

U.S.-Brazil Technology Safeguards Agreement

In March 2019 United States and Brazil signed a space technology safeguard agreement (TSA)-- a necessary step toward allowing U.S. companies (and foreign payloads with U.S. technology) to launch out of the Alcantara site, in the country’s northeast. TSA’s purpose is to preclude unauthorized access to or transfer of technologies associated with Alcantara launches; U.S. or Brazil launch vehicles; or foreign spacecraft carried by a U.S. launch vehicle that contains export-controlled hardware. U.S. requires such TSAs due to U.S. nonproliferation policy under Missile Technology Control Regime (MTCR– Brazil became member in 1995), as well as U.S. export control laws and regulations. Some caveats: • Companies are enticed by the fuel-efficiency savings from launching so close to the equator, but logistical challenges remain and demand for equatorial launches has been mercurial. • China yearns for a possible partnership at Alcantara if U.S. involvement fails to deliver on TSA promises. • Brazil will not have direct access to U.S. missile, rocket or satellite technologies as it always wanted.

Market Forecast: Space Systems

Brazil’s demand for civil and dual-use space- related systems (see left), is expected to rise over the next five years, with growing demand for SatComm/payload capabilities, followed by a drop, and then picking up again. For the 2021- 2030 period an estimated USD 592 million in space-related program spending is anticipated.

Some specific opportunities Janes identified:

• USD 2 million program for production of the SATCOM data link for a Medium Altitude Long Endurance (MALE) UAV Ground Control Station (GCS). • USD 1.4 million SATCOM capability program for Brazil’s acquisition of Napa 500- Ton Class patrol craft.

Brazilian Space Sector: Key Players Brazilian Space Agency/Agência Espacial Brasileira (AEB) www.aeb.gov.br • Headquartered in Brasilia, Brazil. AEB is Brazil’s national space agency. It is supervised by the Brazilian Ministry of Science, Technology, Innovations and Communications (MCTIC). The agency is responsible for formulating, coordinating, and executing Brazilian space policy • Publishes public calls to identify companies, national or foreign, interested in conducting suborbital and orbital launch operations

The National Institute for Space Research (Instituto Nacional de Pesquisas Espaciais, INPE) www.inpe.br • Headquartered in São José dos Campos, São Paulo, INPE is supervised by MCTIC. Its areas of expertise are: space and atmospheric sciences; space engineering; earth observation; weather and climate forecast; earth system sciences

Aerospace Industries Association of Brazil – AIAB http://www.aiab.org.br • National trade association that represents Brazilian aerospace industries. Headquartered in São São Paulo. Cultivates relations with similar trade associations.

Brazilian Association of Defense and Security Materials Industries (ABIMDE) www.abimde.org.br • Brings together military equipment manufactures, industries, and government agencies; seeks to streamline and encourage commercialization, development and quality of Brazilian products.

Executive Overview: Japan

In line with its foreign and defense policies, Japan’s space policy rests on developing defensive capabilities and international cooperation. To meet self-defense needs given regional threats like North Korea, Japan supports development, acquisition and placement of non‐offensive satellites that offer robust ISR and early-warning capabilities. Japan is expected to deepen such defensive capabilities through its satellite acquisitions and operations while working with the United States, its key treaty ally. Japan’s civilian space agency Japan Aerospace Exploration Agency (JAXA) reports directly to Prime Minister Suga, has a strong research and satellite operating budget, and taps into Japan’s extensive indigenous industrial base and defense conglomerates to meet its goals. Opportunities in satellite payload and communication systems market exist, but Japan presents a number of market barriers to U.S. and foreign firms, typically found in the defense industry but that persist elsewhere, such as: lack of opportunities for non-US military suppliers; existing self- sufficiency in Japanese technology firms; high operating costs for foreign firms; and its opaque and complex networks among companies, suppliers, banks, and government entities and officials;

Japan’s National Space Priorities Japan’s space priority framework is embodied by the Basic Space Law, approved by the Diet in 2008, which enables development of non‐offensive satellites to reinforce national security.

Under this law, the Japanese Self Defense Forces (JSDF) can manufacture, possess, and operate its own satellites to support its terrestrial military operations, including early warning satellites as part of a missile defense system.

In 2009 Japan enacted the Basic Guidelines for Space Development and Use of Space document, which emphasized C4ISR and the expanded use of commercially available satellite imagery.

In January 2020 Prime Minister Abe announced plans to set up Japan’s first Space Operations Squadron (pictured on left). The formation of the unit comes after the MoD secured JPY 50.6 billion (USD 460 million) from the Japanese cabinet in December 2019 for space-related defense activities and programs. It is expected to become operational in 2023.

The establishment of the Space Operations Squadron is part of ongoing efforts by Tokyo to respond to concerns about the potential militarization of outer space-- China and Russia have been developing anti-satellite weapons and other systems that can either destroy of disrupt satellite operations by other countries.

JAXA: Budget and Priorities

Japan Aerospace Exploration Agency (JAXA), headquartered in Tokyo, is Japan’s national space agency. It was created in 2003 by merging three Japanese organizations with space responsibilities. JAXA falls under the Office of National Space Policy (ONSP), which reports directly to Prime Minister Suga. JAXA’s 2020 fiscal year budget was approximately JPY 157 billion (USD 1.4 billion), which has remained at that level since 2014. JAXA also co-operates with the Japanese Self Defense Forces (JSDF) to implement its Space Situational Awareness (SSA) system to detect space debris or suspicious activity by a hostile satellites, and enable staff to maneuver Japanese satellites out of harm’s way. It is also redoubling efforts to prevent experimentation with anti‐satellite weapons. Moves to expand the military space-based capabilities are expected to benefit domestic industry.

Japan’s External Relations

Japan-US security alliance remains strong. The passage through the Japanese Diet of two bills in September 2015 formalized Japan's commitment to collective self defense, or defending allies when Japan is not under attack, marking a substantial strengthening of Japan's contribution to the Japan-US security arrangement. Japan’s foreign policy has centered on defensive security policies and maintaining a low international profile. That said, efforts continue to expand the mandate of the Japan Self-Defense Forces (JSDF).

Regional tensions remain high: Japan has trade disputes with South Korea; competing claims with China over the Senkaku/Diaoyu islands; and fears over North Korean missiles and nuclear weapons. To counter these threats, JSDF seeks to rely on its robust industrial base and international partners, especially the U.S., to strengthen intelligence, surveillance, and reconnaissance (ISR) capabilities (see picture on right of military satellite), integrated Air and Missile Defense, and promote the use of outer space for remoting sensing and communications.

Japan’s Defense Industrial Base and Market Entry

Opportunities Market Environment: Japan’s defense industrial base is characterized by a few major corporations that compete for nearly the entire national defense procurement, maintenance, and support budgets. Collaboration in development and production is relatively commonplace and there is a strong tendency for major corporations to diversify into technologically-related markets. Japan’s military aerospace industry has far greater reliance on U.S. technologies than the country's sea and land domains. While Japan is reliable on many military technology fronts, foreign dependency is most pronounced in areas including radars, command and control, unmanned systems, communications, and electro‐optical/infrared systems. Market Barriers: The new government under PM Suga has sought to reduce regulatory burdens on foreign investors and traders, while corruption overall remains low; however, market barriers include: • An existing and dependable indigenous industrial base; • High operating and logistical costs; • Opaque and complex networks among companies, suppliers, banks, and government entities and officials; • A consistent lack of opportunities for non-US military suppliers; • Concerns about the country’s economic recovery after COVID and questions over its impact on future defense and civilian space spending; • Delays in procurement programs.

Market Forecast: Space Systems (Japan)

The largest demand in Japan’s space-related systems acquisitions over the coming decade appear to be in the SatComm payload/terminal market, which is forecasted to rise, especially after 2023 when the Japanese will likely recover to pre-COVID economic levels and as the military and civil space budget environment supports more growth.

Many of the expected opportunities are related to large ship acquisitions and demand for system replacements/updates. Janes identified, for example, that Japan Maritime Self‐Defence Force (JMSDF) will need to acquire a new large survey ships replace its aging; those will involve acquiring new SATCOM terminals.

Japanese Space Sector: Key Players Japan Aerospace Exploration Agency (JAXA) https://global.jaxa.jp/ • Japan’s national space agency. Besides its civil space programs and international cooperative activities, JAXA sponsors scientific research in: electric propulsion, solar sails, lunar and planetary rovers, reusable space transportation systems.

Mitsubishi Heavy Industries (MHI) www.mhi.com/products • MHI is the only supplier of major equipment for all divisions of the Japan Self-Defense Forces (JSDF), but also involved in JAXA domestic space programs, including rocket launchers and services as well as control systems. • The company, which usually accounts for about 16% of the Japan Ministry of Defence’s (MoDʼs) procurement budget, is the country’s most dominant defense manufacturer and, in recent years, has acted as prime contractor on many JSDF programs.

Mitsubishi Electric Corporation (MELCO) www.mitsubishielectric.com/en/products solutions/space/index.page • Melco, one of Japan’s biggest tier-two defense subcontractors, manufactures, markets, and sells electronic equipment fitted to many Japanese military platforms. Its equipment is used in information processing and communications, networking, missile programs, and satellite communications.

Kawasaki Heavy Industries (KHI) https://global.kawasaki.com/ • Japanʼs second biggest defense contractor, involved in large-scale industrial projects in Japan, including rocket launch complex construction and services.

For more information, please contact:

Nate Young Senior Consultant at Janes Equipment, Markets, and Industry (JEMI) Consulting

[email protected]