**Abstract**

This chapter presents a novel method for compressing satellite imagery using phase grating to facilitate the optimization of storage space and bandwidth in satellite communication. In this research work, each Satellite image is first modulated with high grating frequency in a fixed orientation. Due to this modulation, three spots (spectrum) have been generated. From these three spots, by applying Inverse Fourier Transform in any one band, we can recover the image. Out of these three spots, one is center spectrum spot and other spots represent two sidebands. Care should be taken during the spot selection is to avoid aliasing effect. At the receiving end, to recover image we use only one spectrum. We have proved that size of the extracted image is less than the original image. In this way, compression of satellite image has been performed. To measure quality of the output images, PSNR value has been calculated and compared this value with previous techniques. As high-resolution satellite image contains a lot of information, therefore to get detail information from extracted image, compression ratio should be as minimum as possible.

**Keywords:** image compression, grating, Fourier transform, image retrieval, LISS- III sensor
