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India’s private sector space industry is optimistic about the upcoming interim Budget, hoping for measures such as foreign direct investment (FDI) opening up, a production-linked incentive (PLI) scheme, and goods and services tax (GST) exemption for satellite, launch vehicle, and ground equipment manufacturing. Following the successful soft landing of Chandrayaan-3 on the moon last year, the sector anticipates clarity on FDI in space, which could potentially match FDI in defense. Pixxel, a Bengaluru-based spacetech start-up, believes that rolling out FDI, especially up to 74%, would greatly benefit the industry. Indian startups in the space sector have already received funding of $124 million as of November-end, surpassing the previous year’s $120 million. The number of startups in the Indian ecosystem has also increased significantly from 82 in 2020 to 204. The industry is also seeking a PLI scheme for manufacturing, enabling the production of satellites domestically and facilitating more exports. Agnikul Cosmos, another spacetech company, supports these demands and suggests considering GST exemption for launch vehicles, including private players. The Indian Space Association (ISPA) also calls for GST exemption on procurement of key inputs, a reduced tax rate on external commercial borrowings, lower withholding tax for the satellite sector, and a PLI for space-grade components. AK Bhatt, the director general of ISPA, emphasizes the importance of developing a comprehensive regulatory framework and addressing fiscal and taxation challenges to further boost the private space industry in India.
Private sector space players are urging the government for relief in two key areas – Foreign Direct Investment (FDI) and Goods and Services Tax (GST) exemption. These players argue that relaxation in these policies would facilitate the growth of the space industry in the country.
Firstly, they are seeking a relaxation in FDI norms to attract more foreign investment. Currently, the government allows only up to 74% FDI in the space sector, which is considered restrictive. By increasing this limit or even allowing 100% FDI, private space companies believe they can harness foreign expertise and capital to accelerate technological advancements.
Secondly, private sector space players are requesting GST exemption on satellite launches and related services. The imposition of GST on these services has led to increased costs for companies, making them less competitive in the global market. An exemption would not only reduce the financial burden but also enhance the sector’s competitiveness on an international level.
Overall, these appeals for government relief in terms of FDI and GST exemption aim to foster growth and innovation within the private space industry. By addressing these concerns, the government can encourage investment, create job opportunities, and position India as a global player in the space sector.
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