How did the space sector fare in the Budget?, Pg10

Key Highlights:

• The 2026-2027 budget estimate for the Indian space program is 5.3% higher than the pre-pandemic peak, signaling recovery from the COVID-19 disruptions.
• The total expenditure on the space ecosystem is around ₹15,000 crore, including expected revenue from NewSpace India, Ltd. (NSIL).
• Industry associations like SIA-India and ISpA have requested a Production Linked Incentive (PLI) scheme and GST rate rationalization for satellite launches, but the budget is silent on these demands.
• The space sector has not been classified as 'critical infrastructure', hindering access to low-cost lending from institutional banks.

Detailed Insights:

• The national space budget has grown by 182% since 2012-2013, with most growth occurring between 2014 and 2019, but allocations have slowed in the last five years.
• The Finance Ministry has focused on direct budgetary support to ISRO and administrative costs for IN-SPACe, overlooking structural reforms needed for industry competitiveness.
• The current GST regime creates a cash-flow problem for space companies due to taxes on imports and raw materials without corresponding refunds on final products.
• Industry associations have requested a "zero-rated" GST regime, similar to exports, to allow companies to claim full refunds on input taxes and free up liquidity.
• Classifying the space sector as 'critical infrastructure' would reduce the cost of capital by 2-3%, making projects more viable in this capital-intensive industry.
• A lack of relief exists to bridge the gap between initial R&D investments and first revenue, discouraging deep-tech innovation.
• The government announced a dedicated Venture Capital (VC) fund of ₹1,000 crore in the 2024-2025 Budget to boost the space economy, but it doesn't address capital traps created by the GST regime and high debt costs.
• The budget ensures funding for ISRO's Gaganyaan and future planetary missions but doesn't create a viable private space market due to a lack of fiscal support.

Key Concepts Involved:

• Production Linked Incentive (PLI) Scheme: A scheme that gives incentives to domestic manufacturers for increasing production.
• GST Rationalization: Streamlining the Goods and Services Tax (GST) structure to reduce complexities and ensure better compliance.
• Critical Infrastructure: Assets essential for the functioning of a society and economy.
• Venture Capital (VC): Funding provided to early-stage companies with high growth potential.