A stress test for India’s Space framework 

Built on decades of discipline, ingenuity and an enviable record of launch success, ISRO has earned  global trust the hard way – which is precisely why the C-62 failure should be read not as a dent in  capability, but as a moment that highlights the inherent risks of spaceflight. Yet, as India steps onto the  global NewSpace stage, this episode also underscores a harder truth: even a single failure today carries  ecosystem-wide consequences that go well beyond ISRO, shaping investor confidence, insurance  economics and international perception. 

The PSLV-C62 failure has pushed into the foreground, the lack of clarity in India’s legislation and  liability regime for space launch activities. 

What international law won’t do after a launch fails 

The international legal framework created by the United Nations treaties on outer space, starting with  the 1967 Outer Space Treaty, holds a “launching State” internationally responsible for national activities  in space and liable for damage caused by its space objects. The Liability Convention elucidates further:  absolute liability for third-party damage on the surface of the Earth or to aircraft in flight, and  fault-based liability for damage caused elsewhere in outer space. Crucially for manufacturers who lost  their spacecraft on the PSLV-C62 mission, this regime is State-to-State. It creates no private right of  action for a payload owner to claim for its own loss. Unless debris injures people or property on Earth,  or causes damage to another State’s space object through fault in space, the treaty path is inert for  first-party losses. In practical terms, international law determines how risk is distributed at the inter State level, but leaves the financial consequences of a failed launch to be addressed through contract  and insurance. 

India regulates launches, but not losses 

Domestically, India has moved decisively to open the commercial space sector to private participation  through IN-SPACe, and public–private partnerships (PPPs). The Norms, Guidelines and Procedures for  Implementation of Indian Space Policy-2023 in respect of Authorization of Space Activities (NGP) issued by IN-SPACe, reinforces the international liability regime by incorporating treaty obligations,  requiring registration of space objects, and, crucially, mandating third-party liability insurance for  authorised activities. Policies are expected to name the Government of India, the launch operator, and  the customer as insured parties, with coverage calibrated to the mission profile and the scale of potential  third-party harm. 

However, India still lacks a comprehensive statute codifying the core risk-allocation mechanisms found  in mature launch jurisdictions. There is no statutory cap on operator liability vis-à-vis the State, no  legally defined methodology for setting minimum insurance based on “maximum probable loss,” (MPL) and no standing government indemnity above the insured layer to meet India’s treaty obligations  where catastrophic third-party claims exceed private insurance capacity. IN-SPACe’s insurance  requirements are determined on a case-by-case basis rather than through fixed regulatory minima, and  there remains no statutory framework addressing first-party payload loss. Over time, as data  accumulates under the MPL framework and investigation transparency improves, pricing of space  insurance products should normalise. 

Managing loss within the existing framework 

Following PSLV-C62, the principal avenue for financial recovery is launch insurance, where such cover  exists. Launch and early-operations policies are typically placed in international markets and respond  to total or constructive total loss occurring during the launch phase. Historically, domestically launched  ISRO missions have typically not been insured for first-party loss, partly because losses within the 

public sector were treated as sovereign risk, and partly because launch-phase premiums were  prohibitive. In the case of PSLV-C62, several foreign payloads were reportedly insured, while a number  of Indian startup satellites were not. Where insurance is absent, recovery depends primarily on  contractual remedies and, in practice, commercial goodwill. 

These remedies are typically set out in the launch services agreement between the customer and the  launch services provider or mission integrator. In line with global practice, such agreements commonly  include mutual waivers of liability and cross-waivers among participants, exclude consequential loss,  and allocate first-party risk to the customer’s own insurance. In the event of failure, contractual relief  is commonly limited to a reflight at no or reduced cost, a partial refund, or priority access on a  subsequent mission. 

Contracts often distinguish between total and partial mission failure, impose long-stop dates, designate  reflight as an exclusive remedy, and incorporate specific carve-outs. Attempts to pursue claims against  the State are, in most cases, likely to be met with contractual waivers and public-law immunities. 

What global experience tells us 

Europe’s experience following the 2019 failure of Vega Flight VV15, which destroyed the UAE’s  FalconEye-1 satellite, illustrates a mature model of commercial risk allocation. Industry estimates  placed the insured loss at around USD 400 million, making it one of the largest single space-insurance  claims at the time. As is standard in commercial launch markets, the primary financial burden was borne  by insurers rather than the launch provider, and the satellite operator pursued replacement and reflight  through insurance proceeds and commercial arrangements rather than litigation.  

By contrast, the 2003 Columbia space shuttle disaster reflects the operation of sovereign liability  frameworks rather than commercial risk allocation. In the United States, claims by astronauts’ families  were constrained by the Federal Tort Claims Act (FTCA). The estates ultimately accepted negotiated  settlements funded through Congressional appropriation. Property damage and personal injury claims  arising from debris on the ground were processed separately under the FTCA. 

India does not need a formally separate liability statute for government launches, but it does need a  clear, codified distinction in how sovereign launches are treated, as every mature spacefaring nation has  done in practice. Without that choice, government launches are exposed to the same international risks  as private ones, but without the liability caps, indemnities, or fiscal backstops that make those risks  commercially manageable, since such assurances are built into the legal framework as market-enabling  devices, not inherent sovereign privileges.  

What needs to change 

The C-62 incident has brought to the forefront the urgency of legal and policy reforms needed to unlock  capacity and reduce pricing uncertainty in India’s space insurance market. 

The immediate path to recovery runs through well-prepared insurance claims and disciplined use of  launch service agreement remedies, coupled with pragmatic re-flight planning. The longer-term fix, however is legislative. India needs to materially strengthen its NewSpace value proposition by enacting  clear space activities legislation that gives manufacturers, insurers and financiers the predictability they  need. 

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