Global chip shortage: High lead times, import woes plague Indian space tech startups

The start-up manufactures hyperspectral earth imaging satellites and analytical tools through which it aims to mine data and derive insights.

Khandelwal attributes the delays to the semiconductor industry's expected and actual demand drop during Covid. "The expected drop in demand was worse than the actual drop in demand. So the production was scaled down much further than it was supposed to," he added.

Bellatrix Aerospace, which manufactures satellite propulsion systems, has been dealing with a similar issue.

Yashas Karnam, co-founder of the Bengaluru-based start-up, said, "The electronic shortage is still affecting us. And for some other items, there is a big lead time. There is also a minimum order quantity issue, because you don't buy thousands of units right?"

Apart from electronics and a few metals that are not mined in India, Karnam stated that Bellatrix, as a strategy, indigenises many of its systems. "Either we do it within Bellatrix or we do it with ISRO (Indian Space Research Organisation) recognised vendors who are already supplying," Karnam told Moneycontrol.

Skyroot Aerospace, which manufactures launch vehicles, has also indigenised the majority of its systems. When it comes to electronics, however, they continue to rely on the global supply chain.

According to Naga Bharat Daka, co-founder of the start-up, the current lead time for electronics is five times longer than it was before Covid-19.

Importing initial measurement systems, which are required for rocket navigation, has also caused delays for the startup. According to Daka, the lead time for these systems is as long as four months.

How to deal with this

"If the government can get into a free trade agreement with the European Union ecosystem where there are sophisticated suppliers, then it would benefit the Indian space tech ecosystem a lot," Daka said.

For Khandelwal of Pixxel, following up with vendors and relying on the close-knit space technology industry aids in addressing such issues.

"We follow up with our vendors regularly. Some of our vendors are outside India, so we go there to check if things are being done correctly. Because not everyone is as incentivised to get this done on time as you are," Khandelwal said.

What is the government doing

The Ministry of Electronics and Information Technology (MeitY) recently announced an incentive scheme to boost India's semiconductor ecosystem in December 2021.

With an initial overlay of Rs 76,000 crore, the scheme provides financial incentives ranging from 30 to 50 percent of either the total project cost or capital expenditures, depending on the type of proposed manufacturing facility.

On September 21, the Union Cabinet approved modifications to the scheme.

Union minister Rajeev Chandrasekhar recently said that India expects to break ground on up to two fabs and packaging units in the next 18-24 months.

“We not only have a blueprint in terms of semiconductor research, design and manufacturing, but also an approach to integrate higher education with it and develop a talent strategy. We will be the hub of talent for the global electronics ecosystem,” Chandrasekhar said at a technology conference in Delhi on October 26.