DEVAS-ANTRIX DEAL

1. Context

2. What is Devas-Antrix Deal?

• Devas entered into a lease contract with ISRO’s private sector arm Antrix Corporation in 2005. According to the deal, ISRO would lease two satellites GSAT-6 and 6A to Devas for 12 years.
• Devas was supposed to provide multimedia services to cell phones in India using the S-band spectrum, with ISRO leasing 70 MHz of the S-band spectrum.
• Devas would provide multimedia services to mobile platforms in India using S-band transponders on the satellites, with ISRO leasing 70 MHz of S-band spectrum.
• The deal was terminated on February 25, 2011, by the government citing “security reasons“.
• The government decision was taken amid the 2G scam and allegations that the Devas deal involved the handing over of communication spectrum valued at nearly Rs 2 lakh crore for a pittance.

3. The signing of the deal

• In 2005, the deal was signed to provide multimedia services to mobile users using the leased S-band satellite spectrum.
• Under the deal, ISRO would lease to Devas two communication satellites (GSAT-6 and 6A) for 12 years.
• In return, Devas would provide multimedia services to mobile platforms in India using S-band transponders on the satellites.
• As a result of the deal, Devas introduced and utilized technologies like never before and was a huge revenue generator for Antrix.

4. Scrapping of the Deal

• The deal was canceled in 2011 on the ground that the auction of the broadband spectrum was mired in fraud.
• The decision was taken amid the 2G scam and allegations that the Devas deal involved the handing over of a communication spectrum valued at nearly Rs 2 lakh crore for a pittance.
• The government also held that it needed the S-band satellite spectrum for national security and other social purposes.

5. What happened after the termination of the deal?

• After the termination, Devas and its foreign investors approached various international tribunals and courts seeking compensation.
• This has led to arbitration between Antrix and Devas at the International Chambers of Commerce (ICC) and two bilateral investment treaty (BIT) arbitrations.
• India lost all three disputes. Devas was awarded compensation of $1.2 billion by an International Chamber of Commerce tribunal in 2015. Apart from that, Deutsche Telekom was awarded $101 million plus interest by the Permanent Court of Arbitration in Geneva in 2020.
• Mauritius investors were awarded $ 111 million by the UN Commission on International Trade Law tribunal in 2020.
• The German investors claimed compensation for violation of an India-Germany bilateral investment treaty and the Mauritius investors for an India-Mauritius BIT.

6. What steps were taken by India?

• In 2014, the Indian government allocated the case to CBI to look into the 2005 deal.
• It highlighted the misuse of official positions for their benefit. The Enforcement Directorate also filed a charge sheet in 2018 under the Prevention of Money Laundering Act against a former managing director of Antrix and five Devas officials for corruption.

7. What has led to the Liquidation?

• Antrix filed a plea in the National Company Law Tribunal in January 2021 for the liquidation of Devas in India, which it said was incorporated fraudulently.
• On May 25, 2023, the NCLT ordered the liquidation, which was upheld by the National Company Law Appellate Tribunal on September 8, 2021, and by the Supreme Court recently.
• The NCLT order held that the start-up was incorporated in a fraudulent manner and for unlawful purposes.

8. S-band Spectrum

• The S-band spectrum, which is part of the Devas-ISRO deal, is extremely valuable for mobile broadband services, in terms of usage as well as money.
• The frequency, also known as the 2.5 GHz band, is globally used for providing mobile broadband services using fourth-generation technologies such as WiMax and Long Term Evolution (LTE).
• This frequency band is unique because it has a substantial amount of spectrum (190 MHz) that can be put to use for mobile services.

9. Bilateral Investment Treaty

• An agreement made between two countries containing reciprocal undertakings for the promotion and protection of Private investments made by nationals of the signatories in each other's territories.
• BITs protect illegal nationalization and expropriation of foreign assets and other actions by a signatory of the BIT that may undermine the ownership or economic interest of a national of the other signatory.
• One of the main protections under a BIT is that it allows foreign investors to sue states directly by submitting claims for breach of the BIT to arbitration rather than to local courts.

10. Antrix Corporation Limited.

• Antrix Corporation Limited (ACL), Bengaluru is a wholly owned Government of India Company under the administrative control of the Department of Space.
• It was incorporated as a private limited company owned by the Government of India in September 1992.
• It is a marketing arm of ISRO for the promotion and commercial exploitation of space products, technical consultancy services, and transfer of technologies developed by ISRO.
• Another major objective is to facilitate the development of space-related industrial capabilities in India.

11. International Chamber of Commerce (ICC)

• ICC is the world's largest business organization working to promote international trade and responsible business conduct.
• It has been helping to resolve difficulties in international commercial and business disputes to support trade and investment since 1923.
• ICC headquarters is in Paris, France.