India's Space Sector Seeks Fiscal Boost to Become Global Powerhouse

The Association also outlined key private space sector recommendations for government consideration, which can help enhance domestic manufacturing, enhance national security, create high-value jobs, and foster global competitiveness while ensuring controlled and secure access to strategic satellite and geospatial data.

It urged the need to recognise the space sector as 'critical infrastructure' to unlock scale, private investment, and global competitiveness.

"Space infrastructure underpins telecommunications, defence, navigation, finance, weather forecasting, disaster management, and governance. Formal recognition will enable infrastructure-grade financing, reduce the cost of capital by 2-3 per cent, and strengthen national resilience," said ISpA.

While Indian private players now possess proven capabilities across satellites, launch systems, and ground infrastructure, the lack of assured government demand constrains scaling. ISpA called for a formal procurement mandate to help anchor industry growth while allowing ISRO to focus on strategic and exploratory missions.

The Association recommended that at least 50 per cent of all Government procurement for space-based services, hardware, and missions be sourced from Indian private entities (NGEs).

The ISpA also recommended introducing PLI schemes for satellites, launch vehicles, space-grade components, and critical subsystems; providing a five-year tax holiday for space manufacturing, launch services, and space-based service providers; enabling R&D tax credits of 20-30 per cent for qualifying space-sector R&D.

Further, extending Special Economic Zones (SEZs)-like benefits will strengthen India's role as a global space manufacturing and services hub.

The ISpA recommended granting deemed SEZ status to space tech parks and manufacturing clusters, extending duty-free import of components and equipment, zero-rated inter-SEZ supplies, and simplified foreign currency handling for exports.

The Association also called for introducing employment-linked tax deductions for hiring scientific, engineering, and technical personnel; providing concessional GST and customs duties for R&D equipment, linked to end-use certification.

"India stands at a defining moment in its space journey. By recognising space as critical infrastructure, mandating private sector participation, rationalising taxes, incentivising R&D, and strengthening regulatory certainty, the Union Budget 2026-27 can decisively shift the Government's role from provider to partner and anchor buyer," ISpA said.

- IANS