The Indian Space Research Organisation (ISRO) finds itself at a crucial crossroads as significant structural changes sweep through India's space sector.

Once the unrivalled heart of satellite and rocket production, ISRO is now witnessing these roles increasingly delegated to other public sector undertakings and burgeoning private companies.

Recent policy decisions and industry moves have spotlighted questions about ISRO’s future direction and whether it requires an organisational reshuffle to retain its relevance, foster innovation, and adequately respond to current and emerging space industry challenges.

Emerging Shifts: Outsourcing Satellite And Rocket Production

In a defining shift, satellite and rocket production—historically ISRO's forte—are being outsourced. The government now entrusts satellite management to NewSpace India Ltd (NSIL), a public sector entity serving as the commercial arm for India's space activities.

This outsourcing trend is further exemplified by IN-SPACe, the private sector regulator, authorising PixxelSpace India and allies to build and operate India’s first entirely indigenous commercial earth observation (EO) satellite system. Traditionally, EO satellites and satellite constellations were firmly within ISRO’s purview.

The NavIC system, an ambitious navigation satellite constellation, still awaits full completion, fuelling speculation about whether private firms might eventually manage India's PNT (positioning, navigation, and timing) infrastructure.

Notably, IIT-Madras alumni-founded AeroDome Technologies is developing its own navigation satellite constellation, underscoring the rise of private innovation in domains considered strategic.

Satellite Communications: The Only Profitable Space Segment?

Retired ISRO officials, including Dr.S Somanath, observe that only satellite communications yield substantial profits, contrary to EO and PNT services. They opine that an early spin off of ISRO’s satellite communications functions into a dedicated entity could have altered the organisation’s commercial trajectory.

With NSIL acting as the principal procurement and marketing arm, questions persist about whether ISRO’s substantial manpower—about 16,000 strong, primarily researchers—should be reallocated more toward research activities, moving away from routine production and operational responsibilities.

Privatisation And PPP In Rocket Manufacturing

The outsourcing trend extends to rocket production. HAL, India’s aerospace giant, clinched the contract to produce Small Satellite Launch Vehicles (SSLV) worth ₹511 crore, while NSIL signed an ₹860 crore deal with a HAL-Larsen & Toubro consortium for five Polar Satellite Launch Vehicles (PSLV) with ISRO’s technology transfer. Uncertainty clouds future procurements, as it remains unclear whether ISRO will continue this model or revert to in-house vehicle assembly.

Last year, NSIL also invited qualifications for manufacturing the heavy-lift LVM3 rocket via public-private partnerships, signalling openness to broader industry participation.

Revisiting ISRO’s Role: Research, Production, Or Hybrid Model?

Industry experts and former officials highlight a historic blurring of research and production roles within ISRO—unlike the clear demarcation seen in India’s nuclear sector, where research centres (BARC, IGCAR) are distinct from operational entities (NPCIL).

Many argue that ISRO’s continued involvement in both research and assembly has diluted its focus, suggesting that a split into separate government-owned companies for various business functions could outstrip the present monolithic structure in productivity and innovation.

However, Dr.S Somanath points out that ISRO was never intended to establish large-scale production facilities; its core mandate is R&D.

Most production work, from structures and tanks (HAL) to electronics and machining, is already handled by the industry. ISRO's current role is limited to development, system engineering, and integration—tasks that require specialised knowledge and cannot be outsourced wholesale.

The final leg of technology transfer is meant to empower industry partners to take on production, yet a fully self-sufficient ecosystem has been slow to emerge.

Currently, ISRO staff splits between R&D, critical facility operations, and launch operations, with scientists often wearing multiple hats due to a lack of industrial expertise in integration. Only a fraction—roughly 20-30%—are engaged in pure research, with many others participating in production or supportive roles.

Public Sector: A Strategic Buffer Against Market Fluctuations

Several stakeholders argue that continued production by public sector units is essential. As private players mature, PSUs like HAL will support both ISRO and the private sector, acting as stabilisers for critical national capabilities.

The government must retain oversight to avoid strategic vulnerability, much like state-owned BSNL anchors the telecom sector in critical situations.

The suggestion is that, at a later date, ISRO’s assembly and production facilities might be integrated within NSIL, further demarcating research and operational functions. Presently, private players can access select ISRO facilities, reflecting the evolving ecosystem.

The Road Ahead: Choosing A Sustainable Space Sector Model

The debate ultimately centres around the model India should adopt for its space sector. Options include the American model (robust government-private cooperation), the Chinese approach (military-civilian mix), the European model (intergovernmental collaboration with private autonomy), or India’s unique public sector-driven framework now opening to private participation. Industry leaders caution that a hybrid approach risks inefficiency and strategic confusion. India must decide whether ISRO should return to its research-focused roots, spin off operational functions, or continue managing both roles with enhanced collaboration and clarity of purpose.

Conclusion: Necessity of A Strategic Reshuffle?

As India's space ecosystem evolves, the rationale for a strategic reshuffle within ISRO becomes clearer. Separation of research and production, greater public-private partnerships, and targeted government oversight could invigorate innovation and efficiency.

Yet, careful calibration is needed to protect national interests, nurture industrial capabilities, and ensure strategic autonomy. The future of ISRO hinges not merely on organisational changes but on adopting a clear, sustainable model that balances research excellence with industry dynamism, keeping in step with global best practices while addressing India’s unique needs.

IDN (A Synthesised Analysis Based On UNI Report)