ISRO's SpaDeX Mission

Overview of Recent Events

• The Indian Space Research Organisation (ISRO) conducted a significant maneuver with two SpaDeX satellites, bringing them as close as 3 meters apart in orbit.
• After the maneuver, the satellites were moved to a safe distance, with the entire process being closely monitored for data analysis.
• The satellites initially began 230 meters apart and were methodically brought closer at different distances like 105 meters, 15 meters, and finally 3 meters.
• The docking attempts were postponed earlier due to alignment issues, with previous attempts on January 7 and January 9.

Docking Plan

• The docking procedure involves the Chaser satellite progressively approaching the Target satellite.
• The sequence of distances includes 5 km, 1.5 km, 500 m, 225 m, 15 m, and finally 3 m.
• Upon successful docking, ISRO aims to demonstrate the transfer of electrical power and control commands between the satellites.
• A successful docking would position India as the fourth nation to achieve space docking, following the USA, Russia, and China.

Implications of SpaDeX Mission

• Space docking capability is crucial for missions requiring larger payloads that a single launch cannot accommodate.
• Chandrayaan-4 is expected to be the first Indian mission necessitating this capability, with plans to bring lunar samples back to Earth.
• Future requirements include setting up the Bharatiya Antariksh Station, with plans to launch the first module in 2028 and a human mission to the Moon anticipated before 2040.

Enforcement Challenges of the 2017 Make-In-India Order in Government Procurement

The implementation of the 2017 Make-In-India order in government procurement faces numerous challenges. This order aims to prioritize domestic suppliers by prohibiting tenders that specify foreign brands or set eligibility conditions unfavorable to local firms. However, compliance has been inconsistent.

Key Findings on Non-Compliance

• Over 40% of high-value tenders (worth Rs 64,000 crore) by government departments were marked "non-compliant" with the 2017 rules by the Department for Promotion of Industry and Internal Trade (DPIIT).
• Foreign brands are often preferred for products like CCTV cameras, medical supplies, and desktop computers due to perceived superior economic and quality factors.
• From October 2021 to February 2023, 936 out of 1,750 high-value tenders did not comply with the rules, valued at Rs 53,355 crore.

Tender Classification and Compliance

• In 2020, tender classification was introduced, requiring local content of more than 50% for primary suppliers.
• By November 2023, 1,502 out of 3,590 high-value tenders (42%) did not conform to the order, with 982 tenders omitting the provisions, 450 specifying foreign brands, and 152 having restrictive turnover requirements.

Departmental Compliance and Issues

• Some departments, including Military Affairs and Atomic Energy, had not updated procurement policies as per the 2017 order.
• By April 2024, key ministries such as Telecommunications and Electronics had not incorporated the 2020 amendments into their procurement rules.
• Common restrictive practices identified included specifying brands like Cisco for telecom products and Otis for lifts, despite their local manufacturing presence.

Challenges Noted by Officials

• A lack of supply response from domestic suppliers is a significant challenge, as mandates alone do not ensure availability or quality.
• Procurement entities sometimes specify foreign brands due to technical requirements that local suppliers cannot meet.

Committee of Secretaries (CoS) and Compliance Reporting

• In February 2023, the CoS highlighted issues related to excessive turnover requirements and brand-specific tenders violating both the 2017 order and General Financial Rules.
• Ministries were directed to address violations and ensure accountability.
• Compliance reporting has been weak, with only a few ministries like Railways and Power submitting regular reports by April 2024.

Case Studies and Grievances

• Instances of corrective action include AIIMS, Jodhpur cancelling a tender after grievances about restrictive requirements and brand specifications.
• The Confederation of Indian MSME in ESDM & IT successfully contested a tender requiring foreign certifications for local suppliers.

Overview of Atal Innovation Mission (AIM) Achievements and Challenges

The discussion with Chintan Vaishnav, former Mission Director of Atal Innovation Mission, highlights significant achievements and ongoing challenges in the realm of innovation and entrepreneurship in India.

Achievements of AIM 1.0

• Increase in the number of Atal Tinkering Labs from 6,000 to over 10,000 across 722 districts, with 66% in rural areas and 95% in schools.
• Establishment of 101 Atal Incubation Centres and 50 Community Innovation Centres.
• Completion of most targets under the Atal New India challenges for ministries, with some challenges still ongoing.

Interest in Innovation Among Indian Society

The appetite for innovation is evident, with a significant number of schools participating in the Atal Tinkering Labs program. The labs provide a unique environment free from the pressures of exams, allowing students to engage in problem-solving and innovation.

Cultural Challenges to Innovation and Entrepreneurship

• Families often prioritize safety over risk-taking, affecting young entrepreneurs.
• There is a lack of trust between academia and business sectors, and skepticism about the government's efficiency in collaborating with the private sector.

Case Study: Innovation in Sivakasi

An example of regional innovation is the Atal Tinkering Lab in Sivakasi, where students developed a safer method for mixing chemicals in firecracker manufacturing. This project attracted interest from university faculty, demonstrating the potential for real-world problem-solving to enhance educational experiences.

Challenges in India's Startup Ecosystem

Research and Development (R&D) Spending

Despite a vibrant startup ecosystem, India lags behind the US and China in creating original work due to low R&D spending by big businesses. There is a need for a shift in mentality towards investing in research that may not immediately improve profit margins but could prevent industry obsolescence.

The Role of H1B Visas and Global Politics

Changing political landscapes in the US and Europe regarding H1B visas impact the global startup ecosystem. The focus should be on mutual value propositions and leveraging existing international networks.

Funding and the Economic Gap

• Initial funding for startups often relies on family support, with a need to expand risk funding options.
• A large portion of India's GDP comes from vernacular businesses, which have yet to fully engage with the startup ecosystem.

Innovation in Services vs. Manufacturing

Current Trends in Innovation

• Youth entrepreneurs favor the services sector, especially SaaS and e-commerce, due to faster returns and lower initial investment requirements.
• This trend is expected to continue, with deeper pockets potentially leading to more manufacturing innovations.

Exploring New Sectors

India is making strides in sectors like semiconductors, driven by large firms. However, changes in supply chains, such as shifts away from China and Taiwan, require strategic education and skill development.

Education and Innovation Ecosystem

Integrating Tinkering Labs with Traditional Education

• Efforts are underway to reserve seats in institutions like IITs for students excelling in innovation to balance the focus on traditional academic pathways.
• Parental involvement in innovation exhibits is encouraged to broaden acceptance and understanding.

Teacher Involvement and Training

Teachers are crucial to fostering innovation in schools. Initiatives in regions like Jammu Kashmir demonstrate the potential impact of comprehensive teacher training.

Long-term Vision for Innovation

Building India's innovation ecosystem is expected to be a multi-decade effort, requiring institutional changes and a shift from exam-centric education systems to more innovative approaches.

Microfinance Sector Delinquencies in India

The microfinance sector in India is currently facing a significant rise in delinquencies, despite the overall banking sector experiencing a 12-year low in non-performing assets (NPAs).

Current Delinquency Statistics

• Microfinance loans to low-income groups have seen the Portfolio at Risk (PAR) — loans overdue by 31-180 days — double to Rs 28,154 crore by September 2024 from Rs 14,617 crore a year ago.
• The delinquency rate in the 31-180 days overdue category increased to 6.8% of the total portfolio of Rs 4.14 lakh crore as of September 2024, up from 3.8% of Rs 3.84 crore in September 2023.
• The incremental rise in PAR was Rs 8,117 crore for the quarter ending September, with a total increase of Rs 13,468 crore for the 12 months ending September, according to the CRIF High Mark report.
• PAR was 4.6% of advances in June 2024.

Geographical Concentration and Contributing Factors

• Bihar, UP, Tamil Nadu, and Odisha accounted for 62% of the incremental delinquency, with Bihar alone seeing a Rs 1,715 crore increase in the three months ending September 2024.
• Key factors for the decline in portfolio quality include over-leverage by borrowers, debt-waiver campaigns, high field-staff attrition, elections, and extreme weather conditions.

Sectoral Impact and RBI Regulations

• Rising delinquencies may increase credit costs for NBFC-MFIs, impacting microfinance sector growth.
• The Reserve Bank of India has set a common household loan limit of Rs 300,000 to qualify as microfinance, applicable to all sector entities.

Outlook and Challenges

• India Ratings and Research (Ind-Ra) revised the microfinance sector outlook to deteriorating from neutral, maintaining a ‘Stable’ rating for FY26.
• Challenges include borrower overleveraging, reduced center attendance, high branch-level attrition, and frauds leading to higher operating and credit costs.
• Ind-Ra expects near-term challenges to continue, with recovery anticipated in the second half of FY26.
• Recent regulatory actions on some entities, concerns about loan pricing, and an increase in risk-weighted assets have heightened lender concerns.