India is reviewing an agreement between the Indian Space Research Organization (ISRO) and a private communications company that aims to set up a satellite network for delivering applications like e-governance and remote connectivity using S-Band spectrum from Indian satellites.
The move comes even as the Indian government is already facing criticism for having allotted 2G spectrum to mobile operators in 2008 at basement prices, rather than through an auction.
The government will take whatever steps are necessary to safeguard public interest, it said in a statement on Monday in response to a report in a local newspaper, The Hindu, which said that the Comptroller and Auditor General of India (CAG) has instituted investigations into the proposed S-Band spectrum allocation by ISRO.
Antrix, the commercial arm of ISRO, entered into an agreement with Devas Multimedia, a startup in Bangalore, in 2005.
ISRO comes under India's Department of Space, which reports to the office of Prime Minister Manmohan Singh.
Singh also weighed in on Tuesday with a statement from his office that said that no decision had been taken by his government to allocate space segment using S-Band spectrum to Antrix or Devas.
Antrix and Devas were not immediately available for comment. The services Devas provides will be based on satellite transponders leased from ISRO/Antrix, wherein both the satellite and spectrum belong to the space research organization, Devas said in an e-mailed statement.
The Central Bureau of Investigation (CBI) is investigating the 2008 allocation of 2G spectrum, a process that has cost the country US$39 billion according to estimates by the CAG in November.
Last week the CBI arrested A. Raja, the country's communications minister at the time.
In the ISRO case, the CAG is said to have asked for an explanation from the Department of Space on the preferential allocation of S-band spectrum without a competitive bidding process, according to The Hindu.
Similar questions were raised in November by the CAG about the Department of Telecommunications' decision to allot 2G spectrum to operators on a "first come-first serve" basis. The telecommunications department also allegedly favored some private operators by not following proper procedures, the CAG said.
CAG said the audit of certain activities of the Department of Space was under way. Very preliminary queries have been raised which are yet to be replied by the department, it said in a statement on Monday.
Devas was founded in 2004 to set up a national satellite system for delivering applications for rural development, e-governance, emergency communications, remote connectivity and strategic services, according to the company's web site. It has Deutsche Telekom as an investor.
M.G. Chandrasekhar, the company's chairman, was scientific secretary and member of the apex management council at ISRO until 1997.
The Department of Space was authorized in 2000 to enter directly into commercial agreements with non-government users for spare capacity on its satellites, after meeting the requirement of government agencies. Private Indian companies with a foreign equity less than 74 percent were allowed to establish satellite systems.