Union Budget: Space industry seeks tax holidays and PLI scheme

As Finance Minister Nirmala Sitharaman prepares to present the Union Budget next week, the private space sector has outlined several key expectations, including import holidays, GST exemptions for launch vehicle components, productivity-linked incentives (PLI), and increased government involvement as a customer.

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

Industry bodies such as the Indian Space Association (ISpA) and Satcom Industry Association (SIA-India) have advocated for increased government expenditure on the space sector, particularly in the form of an anchor customer for the burgeoning private sector.

"ISpA calls for a government commitment 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," said ISpA Director General Lt Gen Anil K Bhatt (retd).

Bhatt also requested the extension of GST waivers on satellite launch services to other critical satellite components, ground systems, and launch vehicles. He further urged the finance minister to consider tax exemptions, tax holidays, customs duty exemptions for space sector firms, and a reduction in the 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 added.

SIA-India President Subba Rao Pavuluri emphasized the need for budget measures to propel the commercial space sector, with a focus on nurturing deep-tech space startups.

Arpan Sahoo, co-founder and COO of space startup KaleidEO, highlighted the need to extend current tax and customs exemptions to the component level, which would benefit startups operating with limited resources and allow them to scale over the next decade.

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

SIA-India Director General Anil Prakash called for a substantial increase in the space budget to align with other space-faring nations and dedicated funds for local manufacturing and capability building. Prakash also 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 unutilised Universal Service Obligation Fund could be allocated for satellite services to improve connectivity and bridge the digital divide in rural and remote areas of the country," Prakash suggested.

ISpA further proposed a Digital Public Infrastructure and Digital Public Goods approach for Earth observation-based geospatial analytics and insights, which could unlock value and innovation for several stakeholders beyond the space sector.