NEW DELHI: The Indian Space Association (ISpA), which represents India’s private space companies, has put forward a set of recommendations for the Union Budget 2024-25 to strengthen the financial strength and overall growth of the space sector. Over the past several budgets, the Department of Space has steadily increased allocations, supporting the Government’s commitment to strengthening this important sector.
For the financial year 2023-24, the Ministry of Space was initially allocated Rs 12,543.91 crore, which was later revised to Rs 11,070.07 crore. However, the allocation for FY 2024-25 has increased noticeably to Rs 13,042.75 crore.
The increase rate from the initial allocation of Rs 12,543.91 crore in 2023-24 to Rs 13,042.75 crore in 2024-25 is about 4 per cent, and from the revised budget of Rs 11,070.07 crore in 2023-24 to Rs 13,042.75 crore in 2024-25. The increase rate is about 4% to 13,042.75 million rupees in 2025. From 2024 to 2025, the growth rate will be 17.8%. This upward trajectory highlights the government’s efforts to strengthen India’s space technology capabilities, especially as the sector opens up to private participation.
ISpA is calling on the government to build on this momentum and introduce targeted policies and incentives that can further strengthen the country’s position as a global space leader.
ISpA Director General Lieutenant General AK Bhatt (retired) emphasized the importance of government support as follows: The government’s progressive reforms and supportive policies are facilitating India’s next phase of growth in the new space era. ”
Recognize space as critical infrastructure
ISpA recognized the space sector as a critical infrastructure and proposed to derive multiple financial and operational benefits. This status makes it easier to receive GST rebates, tax benefits, and exemptions from import duties. Additionally, it will pave the way for businesses to get long-term loans at low interest rates from designated banks and financial institutions such as NABFID and IIFCL.
The approval also allows space companies to issue tax-advantaged infrastructure bonds, giving them greater access to capital markets. This strategic move highlights the sector’s critical role in national security, economic growth and technological advancement, and ensures sustained investment and support for its growth.
Incentives for domestic manufacturing
A key proposal from ISpA is to extend the Production Linked Incentive (PLI) scheme to space-grade components. The initiative, inspired by the program’s success in other areas, could strengthen domestic supply chains, boost manufacturing and attract investment in space technology.
The association also called for the GST exemption to be expanded to include critical satellite components, ground systems and launch vehicles. This measure will reduce the overall cost of satellite launches while reducing the GST input tax burden for supply chain stakeholders.
Tax and customs reform
With space parks and private sector investment on the rise, ISpA called on the government to introduce tax exemptions and holidays for companies directly or indirectly engaged in the space sector. Additionally, the association recommends customs duty exemption for imported goods, equipment and machinery used in the manufacture of notified goods under the Import of Goods at Concessional Rates Regime (IGCR).
ISpA also proposes reducing the tax rate on interest from foreign borrowings to 5% to make foreign financing more cost-effective. Furthermore, reducing the withholding tax rate on payments to satellite service providers from 10% to 2% will improve the financial viability of satellite operators, especially at the beginning of their operations.
Introduction of space technology
The association stressed the importance for governments to implement space technology in areas such as agriculture, disaster management, urban development and remote connectivity. Notably, the Ministry of Road Transport and Highways (MoRTH) has already piloted FASTag GPS, a satellite-based toll collection system, as an alternative to the traditional toll system.
ISpA also highlighted the need to create a Digital Public Infrastructure (DPI) and Digital Public Goods (DPG) framework for geospatial analysis. Similar to efforts in agriculture and other sectors, this framework has the potential to democratize access to space technology and enable innovation across industries.
Reasonable frequency usage fees
The administrative allocation of spectrum for satellite applications under the new Telecommunications Act of 2023 is a landmark development. ISpA insists on reasonable spectrum usage charges (SUC) as a percentage of adjusted gross revenue (AGR) to prevent cost burdens for satellite service providers and foster a favorable growth environment.
Increase industry trust
Lt Gen Butt lauded the government’s efforts, including the Rs 1,000-crore VC fund announced in the last budget for space startups. He said, “High-profile announcements such as a Rs 1,000-crore VC fund for space startups have significantly increased industry confidence in the government’s commitment to this sector.” With the appointment of a fund manager, we expect the fund to be operational within the next two to three months. ”
Looking ahead, he said the association is looking forward to additional financial incentives from the government in the upcoming budget to further strengthen India’s space economy and propel this burgeoning industry to new heights. He added that there is.
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