In a bid to solidify India's position as a global space leader, the Indian Space Association (ISpA), representing the interests of private space companies in the country, has presented a set of crucial recommendations for the upcoming Union Budget 2024-25. The focus of these proposals is to bolster the financial strength of the burgeoning space industry in India, according to a release on Wednesday, January 24.
Over the past year, the
Indian Space Research Organisation (ISRO) has achieved remarkable milestones, instilling a sense of national pride. Initiatives such as technology transfer to the private sector, international collaboration agreements such as
the Artemis Accords, iCET, and INDUS-X, alongside increased private investments, have played pivotal roles in shaping India's space landscape. The 10-year vision outlined by IN-SPACe aims to cultivate a robust $44 billion space economy by 2033.
The transformative phase marked by the Indian Space Policy 2023 opened doors for Non-Government Entities (NGEs) to actively participate in core space activities. While IN-SPACe's 10-year strategy anticipates substantial growth, the nascent nature of the private sector demands strategic government support.
Key recommendations:
Expansion of GST Exemption: Extend GST exemption to cover satellites, launch vehicles, and ground equipment manufacturing. Additionally, propose a similar exemption for the procurement of essential inputs.
Tax Incentives: Provide tax holidays and exemptions for firms in the space sector. Consider concessions on customs duties for specified imports.
Reduced Tax Rate on Borrowings: Lower the tax rate to 5% on external commercial borrowings, considering the capital-intensive nature of the space sector.
Withholding Tax Adjustment: Decrease withholding tax on satellite sector profits from 10% to 2% due to narrow profit margins.
Production-Linked Incentives: Introduce a Production-linked Incentive (PLI) scheme for space-grade components, akin to the PLI for drones.
Government Procurement Commitment: Commit to procuring and adopting space technology solutions across various domains, including agriculture and disaster management.
Clarity on FDI Policy: Urgent clarification needed on Foreign Direct Investment (FDI) policy for the space sector and associated aspects.
Spectrum Usage Charges: Implement reasonable Spectrum Usage Charges (SUC) as a percentage of Adjusted Gross Revenue (AGR) for satellite services using non-auctioned spectrum under the new Telecommunications Act, 2023.
Depreciation for Satellite Operators: Permit satellite operators to claim 25% depreciation on one-time fees and license charges to optimise the tax impact.
Capital Subsidy on Infrastructure Investments: Propose a capital subsidy on infrastructure investments, with an additional subsidy for facilities in remote areas, to stimulate manufacturing capabilities and enhance launch infrastructure.Expected Outcomes:
Boost Manufacturing, Investments, and Innovation: Implementation of recommendations is expected to stimulate growth in manufacturing, increase investments, and foster innovation in the private space sector.
Catalyze Adoption of Space Tech Applications: The proposed measures aim to accelerate the adoption of space technology applications in various sectors.
Ease Business Operations and Reduce Costs: Tax incentives and subsidies are anticipated to streamline business operations and reduce costs for space industry players.
Position India as an Attractive Investment Destination: A comprehensive regulatory framework and fiscal incentives are projected to position India as an attractive investment destination in the global space market.
Realize $44 Billion Opportunity by 2033: The overarching goal is to leverage government support and visionary policies to realize a $44 billion space economy by 2033.Lt. Gen. A.K. Bhatt (Retd.), Director General of the Indian Space Association, emphasised the need for a comprehensive regulatory framework and the resolution of fiscal and taxation challenges.
Bhatt stated, "By leveraging the momentum provided by the Government and its visionary policy, these enterprises can deliver significant socio-economic benefits to the nation."
