Pioneering the Future of Japan’s Space Industry: Insights from the U.S. and India's Space Industry Ecosystems

Key Highlights

• Japan’s Space Strategy Fund established in March 2024 aims to support fundraising for space startup companies and foster the development of the country’s space industry. With a planned investment of 1 trillion yen over ten years, combined with an increase in the defense budget, its space industry is now poised for a new development opportunity. These changes are expected to make it easier for startup companies to secure funding for technology development and market expansion, enhancing competitiveness. From the perspectives of national security and promoting economic development, the importance of the space industry is also increasing, leading to new business opportunities alongside technological innovation. This report examines the space industry ecosystems of Japan, the US, and India, and proposes solutions to issues facing Japan’s space industry.
• The space industry of Japan is on the threshold of a significant growth opportunity. Over 100 space startup companies have emerged domestically, including internationally recognized companies such as Institute for Q-shu Pioneers of Space, Inc. (iQPS). Reductions in rocket launch costs are promoting the entry of startup companies and creating diversification in the space business. However, Japan’s space industry tends to rely on limited government demand. While it is important to make use of government demand initially when creating businesses in this field, relying on it solely makes scaling up difficult. Also, the Space Strategy Fund’s support is concentrated on the space equipment industry, and the commercialization paths for sectors outside this industry are unclear. With substantial initial investment and a long timeline until returns are generated, securing funding is a major challenge for startup companies in the space business. Expanding government support to the space utilization service and satellite data user industries and strengthening specific support measures aimed at companies pursuing commercialization are essential for sustainable growth.
• The US space industry has advanced technological innovation and commercialization through government startup support programs, with Space X’s success as the most notable example. Space X enhanced its competitiveness through agile development methods and reusable rocket technology. India has also achieved low-cost, high-efficiency space missions. It is building an ecosystem for nurturing private enterprises through technology provision, personnel introduction, launch services from ISRO, and attracting foreign capital. Japan needs a long-term strategy and the construction of its own ecosystem focused on commercialization.
• Continued reliance on limited government demand by Japan’s space industry may stall cost reductions and technological innovation, increasing its dependence on foreign countries. To avoid this, the government and private companies must work together to stimulate private demand. Drawing on the US commercialization support model and India's development support model, Japan should also advance commercialization and development support for startup companies. Specifically, it must strengthen public-private partnerships, promote the entry of startup companies, and encourage the use and integration of advanced technology. Improving rocket development and launch capabilities to transport satellites is also crucial and should be robustly supported by the government. This would likely lead to the construction of a space industry ecosystem that leverages Japan's strengths, fostering the sustainable development of its space industry.