Space industry demands tax exemptions, PLI scheme from Union Budget

Import holidays, GST exemption for components of launch vehicles, productivity-linked incentives (PLI) and government stepping in as a customer are some of the expectations of the private space sector from Finance Minister Nirmala Sitharaman as she presents the Union Budget next week.

"More money for space related acquisitions, tax holidays, import holidays, and PLI scheme for space," Pixxel Space co-founder and CEO Awais Ahmed told PTI when asked about his wishlist for the budget.

Industry bodies Indian Space Association (ISpA) and Satcom Industry Association (SIA-India) have sought greater government expenditure on the space sector in the form of an anchor customer for the nascent private sector.

"ISpA calls for a commitment from the government to procure and adopt space technology solutions across various governance areas such as agriculture, disaster management, infrastructure planning and development monitoring, urban development, and remote area connectivity," ISpA director general Lt Gen Anil K Bhatt (retd) said.

Bhatt also sought extension of GST waiver on satellite launch services to other critical components of satellites, ground systems, and launch vehicles.

He also wanted the finance minister to consider tax exemptions/tax holiday and custom-duty exemptions for space sector firms and reduction of tax rate on interest on foreign borrowings.

"The prompt implementation of the Space Activities Act is crucial for addressing legal and standards related issues, providing a clear regulatory framework for the industry," Bhatt said.

"The Budget should prioritize measures to propel the commercial space sector, with a focus on nurturing deeptech space startups," SIA-India president Subba Rao Pavuluri told PTI.

Arpan Sahoo, co-founder and COO of space startup KaleidEO, said while current tax and customs exemptions benefit systems and sub-systems, there is a need to extend these to component levels.

"This is crucial for startups operating with limited resources, allowing them time to scale over the next decade," Sahoo said.

"As a sunrise industry, more demand generation from the government is essential to drive non-linear growth," he said.

SIA-India director general Anil Prakash made a strong pitch for a substantial increase in the space budget to align with space-faring nations, alongside dedicated funds for local manufacturing and capability building.

Prakash urged the government to recognize the potential of market segments such as rural broadband, enterprise connectivity, maritime, aviation, and disaster management.

"A portion of the unutilized Universal Service Obligation Fund could be allocated for satellite services to improve connectivity and bridge the digital divide in rural/remote areas of the country," he said.

ISpA also said a Digital Public Infrastructure and Digital Public Goods approach for Earth observation based geospatial analytics and insights can unlock value and innovation to several stakeholders well beyond the space sector.