ISpA seeks clarity on FDI & PLI scheme for space sector

Indian Space Association, the industry association representing private space companies in the country, has proposed recommendations for the Union Budget 2024-25, with a focus on enhancing the financial well-being of the industry.

The past year has witnessed remarkable achievements by ISRO, generating national pride. Initiatives like technology transfer to the private sector, international cooperation agreements (Artemis Accords, iCET, INDUS-X), and increased private investments have shaped India’s space industry. A 10-year vision by IN-SPACe targets a $44 billion space economy by 2033.

The Indian Space Policy 2023 marked a transformative phase, welcoming Non-Government Entities (NGEs) into core space activities. IN-SPACe’s 10-year strategy envisions significant growth. However, the private sector’s nascent nature necessitates strategic government support.

Key recommendations:

1. Expand GST exemption to satellites, launch vehicles and ground equipment manufacturing. Plus, similar exemption on procurement of key inputs.
2. Provide tax holiday and exemptions for space sector firms. Concession on customs duties for notified imports.
3. Lower tax rate to 5% on external commercial borrowings given capital intensive nature.
4. Reduce satellite sector withholding tax from 10% to 2% given low profit margins.
5. Introduce Production-linked Incentive scheme for space-grade components on lines of PLI for drones.
6. Governments should commit to procuring and adopting space tech solutions across domains like agriculture, disaster management etc.
7. Clarity needed urgently on FDI policy for space sector and associated aspects.
8. Reasonable SUC (Spectrum Usage Charges) as percentage of AGR for satellite services allocated non-auctioned spectrum under new Telecommunications Act, 2023.
9. Satellite operators should be permitted 25% depreciation on one-time fee and licence charges to optimize tax impact.
10. Capital Subsidy on infrastructure investments with additional subsidy for facilities in remote areas, is proposed to spur manufacturing capabilities, launch infrastructure advancement and downstream space offerings growth in India’s private space industry.

Expected Outcomes:

• Boost manufacturing, investments and innovation
• Catalyse adoption of space tech applications
• Ease business operations and reduce costs
• Position India as attractive investment destination
• Realise $44 billion opportunity by 2033

Government commitment to consume NewSpace solutions will drive innovation. Implement a Digital Public Infrastructure (DPI) and Digital Public Goods (DPG) approach for Earth observation-based geospatial analytics. The early enactment of the Space Activities Act is essential for resolving legal and standards-related issues.

Lt. Gen. A.K. Bhatt (Retd.), Director General, Indian Space Association said, “We welcome the government’s recent reforms and its groundbreaking initiative to allocate satellite spectrum through an administrative approach. These initiatives undoubtedly have the potential to boost the nascent private space industry in India. Now, to propel this promising industry and drive innovation, it is crucial for the government for the development of a comprehensive regulatory framework and address existing fiscal and taxation challenges. We urge the government to consider our recommendations for incentivizing the growth of private space enterprises. By leveraging the momentum provided by the Government and its visionary policy, these enterprises can deliver significant socio-economic benefits to the nation.”
BCS Bureau