Indian Space Industry is seeking a Production-Linked Incentive Scheme

Recent legislative initiatives in the space sector have been focused on bridging the gaps in commercial uses. While India has been successful in space exploration, it has yet to incorporate the private sector into its commercial space activities completely. Indian Space Research Organisation has been the only driver of India’s space programme (ISRO).

India’s space economy was anticipated to be worth $9.6 billion in 2020, although government-funded programmes have primarily driven it. Despite this, India’s space industry represents barely 2% of the global space economy. The policy direction in this scenario is to incorporate private players into the space domain.

Just before the forthcoming budget, Lt. Gen. AK Bhatt (Retired), Director General of the Indian Space Association (ISpA), has submitted ideas from the Space industry on tax policies and incentives to boost investment, R&D, and employment in the space sector.

Financial support from the government, including loans, grants, tax incentives, etc.  

Tax benefits for enterprises and organisations functioning in the space industry include reduced corporation tax rates and tax credits for research and development expenses. As the new space policy is in its last stages of development, tax exemptions for startups should be extended until the new policy is released/implemented.

Production Linked Incentive (PLI) Plan for the Space industry 

The PLI scheme would encourage research and development in India and incentivise companies involved in the space industry.

GST exemption for providers of private satellite launch services

GST exemption for satellite launch services shall be offered to all parties engaged in providing such services. This would result in the formation of an industry-wide equal playing field. The government may also consider granting deductions or credits to businesses incurring these expenses as part of their space sector operations. These policies are intended to promote job creation and foster the expansion of private satellite launch service companies.

Equal treatment of capital gains for shares of unlisted companies 

It would be advantageous to establish greater equality in terms of the short-term capital gains tax rate and treatment for listed and unlisted entities, given that the majority of space-tech companies in India are startups and that gaining access to capital can be difficult.

Space Technology Parks will support space-related endeavours 

Building a Space Technology Park (STP) ecosystem would create a thriving environment for commercial enterprises of all kinds, including startups working on innovative space technology. It will enable the Indian government and industry to develop and enhance space-related products and services.

Group of specialists for Space Ecosystem Usage

Creating a pool of professionals that can assist government departments/ministries in appropriately using existing space technology.

Exemption from Angel Tax 

Considering that most space technology companies in India are startups with limited access to funding, it would be advantageous to exempt them entirely from the angel tax category as part of India’s efforts to assist the growth of its space industry.

According to the ISpA release, these measures aim to create a more conducive environment for companies and organisations operating in the space sector and attract investment, research and development, and employment in this growing industry to make India a global centre for the production of space-based products. 

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