Budget 2024: Space Industry Seeks Tax Breaks

The Union Budget 2024 presents a pivotal moment for India’s burgeoning space sector. As Finance Minister Nirmala Sitharaman prepares to announce the budget, the private space industry has outlined a comprehensive wishlist aimed at fostering growth and innovation. This wishlist includes a range of incentives and strategic allocations to bolster the space economy, which is projected to reach $44 billion by 2033.

The Wishlist: Key Demands of the Space Sector

1. Import Holidays and GST Exemptions
   • Industry leaders are advocating for more import holidays and GST exemptions for components of launch vehicles.
   • These measures aim to reduce costs and make India a competitive player in the global space market.
2. Productivity-Linked Incentives (PLI)
   • To encourage domestic manufacturing, the space sector is requesting productivity-linked incentives.
   • These incentives could drive innovation and increase the sector’s contribution to the national economy.
3. Government Expenditure on Space-Related Acquisitions
   • Increased government spending on space-related acquisitions is crucial for growth.
   • This could involve procurement of satellites and other space technologies for various governance applications.

Strategic Allocations: Supporting a Nascent Industry

1. Government as an Anchor Customer
   • The Indian Space Association (ISpA) and Satcom Industry Association (SIA-India) stress the importance of the government acting as an anchor customer.
   • This support would provide a stable revenue stream for private space companies.
2. Adoption of Space Technology Solutions
   • Lt Gen Anil K Bhatt (retd), Director General of ISpA, advocates for the adoption of space technology solutions in agriculture, disaster management, infrastructure planning, urban development, and remote connectivity.
   • This would not only improve governance but also drive demand for space technologies.
3. GST Waivers on Critical Components
   • Extending GST waivers from satellite launch services to other critical components is another key demand.
   • This would alleviate financial burdens and foster innovation in the space sector.
4. Tax Exemptions and Custom-Duty Waivers
   • Tax exemptions and custom-duty waivers for space sector firms are essential for growth.
   • These incentives could lower operational costs and attract more investments into the industry.

Implementation of the Space Activities Act

1. Regulatory Framework
   • Prompt implementation of the Space Activities Act is crucial.
   • A clear regulatory framework would provide stability and predictability, encouraging investments in the sector.
2. Strategic Incentives for Domestic Demand
   • Strategic incentives like lower GST rates, tax holidays for startups, reduced import duties on critical components, and low-interest financial loans are vital.
   • These measures would stimulate domestic demand and support the growth of space startups.

Integrating Space Manufacturing into Defense Obligations

1. Defense Offset Obligations
   • Anil Prakash, Director General of SIA-India, suggests integrating space manufacturing into defense offset obligations.
   • This would ensure sustained funding and market demand for the space sector.
2. Quantitative Analysis of the Space Economy
   • Conducting a detailed quantitative analysis of the space economy is recommended.
   • This would provide accurate measurement and boost funding for the sector.

Budget Allocations for INSPACe

1. Supporting Space Startups
   • Pawan Kumar Chandana, co-founder and CEO of Skyroot Aerospace, highlights the need for increased budget allocations for the Indian National Space Promotion and Authorisation Centre (INSPACe).
   • This would support the growing number of space startups and drive innovation.
2. Ambitious Missions
   • Increased budget allocations for ISRO’s ambitious missions, like Gaganyaan, are essential.
   • This would enhance India’s position in the global space economy.

As India stands on the brink of a new space age, driven by private spaceflight companies, satellite providers, and space-enabled services, the Union Budget 2024 is a critical opportunity. The comprehensive wishlist from the space industry reflects a strategic vision to position India as a leader in the global space economy. Meeting these demands could pave the way for sustained growth and innovation in the sector.

Aakhir Tak Editor-in-Chief

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