New Delhi: The Indian Space Association (ISpA), representing private space companies in India, has presented a set of recommendations for the Union Budget 2024-25 to enhance the financial strength and overall growth of the space sector. Over the past few budgets, the Department of Space has witnessed a steady increase in allocations, underscoring the government’s commitment to bolstering this critical sector.
For the fiscal year 2023-24, the Department of Space was initially allocated Rs 12,543.91 crore, which was later revised to Rs 11,070.07 crore. However, the allocation for the fiscal year 2024-25 saw a notable rise to Rs 13,042.75 crore.
From the initial allocation of Rs 12,543.91 crore in 2023-24 to Rs 13,042.75 crore in 2024-25, the percentage increase is approximately 4 per cent, while From the revised budget of Rs 11,070.07 crore in 2023-24 to Rs 13,042.75 crore in 2024-25, the increase is 17.8 per cent. This upward trajectory highlights the government’s efforts to strengthen India’s capabilities in space technology, especially as the sector opens up to private participation.
The ISpA has built on this momentum, urging the government to introduce targeted policies and incentives that can further amplify the country’s position as a global space leader.
Lt. Gen. A.K. Bhatt (Retd.), Director General of ISpA, emphasized the significance of government support: “We have witnessed remarkable growth in the Indian space sector over the past few years, particularly since its opening to private players in 2020. The government’s progressive reforms and supportive policies are catalyzing the next phase of growth in India’s New Space Age.”
Recognizing Space as Critical Infrastructure
ISpA has proposed that the space sector be recognized as critical infrastructure, unlocking multiple financial and operational benefits. This status would facilitate access to GST rebates, tax benefits, and import duty exemptions. Moreover, it would pave the way for companies to access low-interest, long-term loans from scheduled banks and financial institutions like NABFID and IIFCL.
Recognition would also enable space firms to issue infrastructure bonds with associated tax advantages, boosting their access to capital markets. This strategic move underscores the sector’s critical role in national security, economic growth, and technological advancements, ensuring sustained investment and support for its growth.
Incentives for Domestic Manufacturing
A key proposal from ISpA is the extension of the Production Linked Incentive (PLI) scheme to space-grade components. Inspired by the scheme’s success in other sectors, this initiative could strengthen the domestic supply chain, boost manufacturing, and attract investment in space technology.
The association has also called for the expansion of GST exemptions to include critical satellite components, ground systems, and launch vehicles. This measure would reduce the overall cost of satellite launches while easing GST input tax burdens on supply chain stakeholders.
Tax and Customs Duty Reforms
With space parks and private sector investment on the rise, ISpA has urged the government to introduce tax exemptions and holidays for companies directly or indirectly engaged in the space sector. Additionally, the association recommends customs duty exemptions for imported goods, equipment, and machinery used in the manufacturing of notified goods under the Import of Goods at Concessional Rate of Duty scheme (IGCR).
ISpA has also proposed a reduction in the tax rate on interest from foreign borrowings to 5 per cent to make foreign financing more cost-effective. Furthermore, lowering the withholding tax rate on payments to satellite service providers from 10 per cent to 2 per cent would improve the financial viability of satellite operators, particularly during their initial years of operation.
Adopting Space Technology
The association emphasized the importance of government adoption of space technology in areas like agriculture, disaster management, urban development, and remote connectivity. Notably, the Ministry of Road Transport and Highways (MoRTH) has already piloted a satellite-based toll collection system, FASTag GPS, as a replacement for traditional toll systems.
ISpA also highlighted the need for creating a Digital Public Infrastructure (DPI) and Digital Public Goods (DPG) framework for geospatial analytics. Similar to initiatives in agriculture and other sectors, this framework could democratize access to space technology and unlock innovation across industries.
Reasonable Spectrum Usage Charges
Under the New Telecommunications Act 2023, the administrative allocation of spectrum for satellite applications is a landmark development. ISpA has advocated for reasonable Spectrum Usage Charges (SUC) as a percentage of Adjusted Gross Revenue (AGR) to prevent cost burdens on satellite service providers, fostering a favourable growth environment.
Confidence Boost for the Industry
Lt. Gen. Bhatt lauded the government’s efforts, including the Rs 1,000 crore VC fund announced in the last budget for space startups. He stated: “Notable announcements like the Rs 1,000 crore VC Fund for space startups have significantly bolstered industry confidence in the government’s commitment to this domain. We expect the fund to become operational in the next 2-3 months with the appointment of the fund manager.”
Looking ahead, he added that in the upcoming budget, the association will look forward to additional financial incentives from the government to further strengthen India’s space economy and propel this burgeoning industry toward new heights.
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