Space Industry Body Calls for Budget Support to Propel India's Global Ambitions
The Indian Space Association has made a strong appeal to the central government. They want the upcoming Union Budget for 2026-27 to include specific fiscal and regulatory measures. These measures should anchor India's ambition of becoming a leading global space power. The private industry must serve as a core driver of growth in this sector.
Structural Support Needed Beyond Current Policy
In its formal recommendations submitted to the government, ISpA acknowledged the Space Policy 2023 enabled private participation. However, the sector now requires deeper structural support. This support is crucial to overcome significant challenges. The space industry remains highly capital-intensive. It also involves long gestation cycles, typically spanning five to seven years.
"India stands at a defining moment in its space journey," stated ISpA director-general Lt Gen (retd) AK Bhatt. He emphasized that the Budget can decisively shift the government's role. It should move from being a mere provider to becoming a partner and an anchor buyer. This shift requires several key actions.
The government must recognize space as critical infrastructure. It should mandate private sector participation. Rationalizing taxes and incentivizing research and development are also vital. Strengthening regulatory certainty completes this essential package.
Key Bottleneck: Lack of Formal Infrastructure Status
ISpA identified a major bottleneck hindering growth. The absence of formal infrastructure status for space assets limits access to finance. Companies struggle to secure long-term, low-cost funding without this classification.
The association proposes a clear solution. The government should recognize 'space and satellite infrastructure' as a distinct sub-sector. This recognition should fall under the Harmonised Master List of Infrastructure. Such a move could significantly reduce the cost of capital by an estimated 2 to 3 percent.
Unlocking new funding avenues would become possible. These include bank lending and development finance institution funding through bodies like NaBFID. Infrastructure bonds, viability gap funding, insurance, and credit-enhanced instruments would also become accessible.
The proposed infrastructure classification should explicitly cover a wide range of assets. This includes launch vehicles and spaceports. Satellite manufacturing and integration facilities across various orbits like LEO, MEO, and GEO are also crucial. Ground stations, telemetry tracking and command networks, and mission control centers must be included. Earth observation and communication constellations, navigation systems, and space situational awareness networks round out the list.
Creating Demand Through Government Procurement
On the demand side, ISpA has sought a mandatory procurement policy. This policy would require government agencies to source at least 50 percent of their space-based needs from Indian private entities. This applies where viable domestic capability exists.
The scope of this procurement is broad. It covers satellite manufacturing and payloads. Earth observation data and analytics are included. Satellite communication services, ground infrastructure, launch subsystems, and deep-tech components also fall under this umbrella.
Several key ministries have been identified as potential anchor customers. These include defence, telecommunications, agriculture, environment, and urban affairs. The Indian National Space Promotion and Authorisation Centre would provide oversight for this procurement framework.
ISpA cited global practices to support its proposal. NASA sources over 80 percent of its systems from the private industry. The European Space Agency follows a model where 90 percent of execution is industry-led.
Detailed Fiscal Package Proposed
The association outlined a comprehensive fiscal package to boost the sector. Key proposals include:
- Production Linked Incentive schemes for satellites, launch vehicles, and critical subsystems.
- A five-year tax holiday specifically for space manufacturing and services.
- Research and development tax credits ranging from 20 to 30 percent.
- Accelerated depreciation benefits on satellites and rockets.
- An interest subvention of 2 to 5 percent on term loans for space manufacturing, launch services, and R&D.
Other significant recommendations focus on regulatory and financial reforms. ISpA proposes GST reforms to treat satellites and launch services as zero-rated supplies. This would enable companies to claim full input tax credit.
The body also suggests providing SEZ-like benefits for space manufacturing clusters. It recommends higher foreign direct investment limits of 74 percent for launch vehicle companies under the automatic route. Finally, ISpA stresses the need for enacting a comprehensive Space Act. This legislation would provide the regulatory certainty required for long-term investments and planning.
The recommendations from Bengaluru-based ISpA arrive at a critical juncture. India's space sector is poised for transformation. Strategic budgetary support could unlock its full potential and establish the country as a formidable player on the global stage.
