Astrophysicists demand larger (mirror diameter > 10m) space optical telescopes to investigate more distant events that happened during the very early period of the universe, for example formations of the earliest stars. The deployable telescope design like James Webb Space Telescope that has a 6.5m diameter primary mirror has already reached the capacity limits of the existing launch vehicles. Therefore, the space industry has been considering using robotic technologies to build future optical reflecting three-mirror structured space telescopes in orbit from smaller components. One of the design paradigms is to use a high-DOF manipulator on a free-flying platform to build the optical telescope in orbit. This approach requires high precision and accuracy in the robotic manipulation GNC system that has several challenges yet to be addressed: 1. Orbital environmental parameters that affect sensing and perception; 2. Limitations in robotic hardware, trajectory planning algorithms and controllers. To investigate these problems for in-orbit manipulation, the UK national hub on future AI and robotics for space (FAIR-SPACE) at the Surrey Space Centre (SSC) has been developing a ground-based hardware-in-the-loop (HIL) robotic demonstrator to simulate in-orbit manipulation. The key elements of the demonstrator are two 6-DOF manipulators and a re-configurable sensor system. One of the manipulators with a > 3-DOF gripping mechanism represents the assembly manipulator on a spacecraft whose orbital dynamics, kinematics, and environmental disturbances and uncertainties are propagated in a computer. The other 6-DOF manipulator with a torque/force sensor is used as a gravity offoad mechanism to carry the space telescope mirror segment. The relative motions between the service/manipulation arm and the mirror segment are computed and then executed by the second arm. The sensor system provides visual feedback of the end-effector and uses computer vision and AI to estimate the pose and position of the mirror segment respectively. The demonstrator aims to verify and validate the manipulator assembly approach for future large space optical telescopes against ground truth and benchmarks. This paper explains the motivation behind developing this testbed and introduces the current hardware setup of the testbed and its key features.