Space industry seeks PLI, tax sops and procurement push in Budget

India's space industry has sought PLI incentives, tax holidays and a strong government procurement push in the Budget to spur private investment and global competitiveness

The space sector in India has put forth demands, including considering the industry as a critical infrastructure, demand creation through 50 per cent government procurement from private entities, production linked incentive (PLI), and tax sops, for the upcoming Budget 2027.

 

Given the high upfront costs, rapid technological obsolescence, and delayed revenues, the space sector requires a tailored fiscal framework distinct from conventional manufacturing, Indian Space Association (Ispa) said in a statement.

 

Ispa cited that the government can consider PLI schemes for satellites, launch vehicles, space-grade components, and critical subsystems, while also providing a five-year tax holiday for space manufacturing, launch services, and space-based service providers. Industry also demanded deemed SEZ status for space tech parks and manufacturing clusters.

 

“While global peers classify space assets as strategic or critical infrastructure, India’s space ecosystem currently lacks formal infrastructure status, limiting access to long-term, low-cost capital. Recognising space infrastructure as a distinct infrastructure sub-sector is essential to unlock scale, private investment, and global competitiveness,” it said in a statement.

 

Global best practices demonstrate that Nasa sources over 80 per cent of its systems from industry, while the European Space Agency follows a 90 per cent industry-led execution model. 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).

 

Krishanu Acharya, co-founder and chief executive officer, Suhora Technologies, also batted for government procurement in ministries like agriculture, disaster management, and urban development, with dedicated lines for earth observation analytics, faster small-ticket contracts, and multi-year programmes earmarking private spacetech solutions over legacy pilots.

 

“We also expect the budget to expand central VC/innovation funds and institutional capital earmarked for space, building on the ₹1,000 crore space-startup fund announced earlier, with co-investments and R&D grants tailored to AI/ML geospatial applications, subsidized national EO data lakes, and ISRO-shared cloud infrastructure to slash capex for analytics firms," Acharya said.

 

Ispa also sought a five-year tax holiday for space manufacturing, launch services, and space-based service providers. It also sought R&D tax credits of 20–30 per cent for qualifying space-sector R&D. Capital investment tax credits for launch pads, ground stations, and satellite production plants were also among other demands.

 

Industry also demanded strengthening of the data ecosystem. “Geospatial technologies are being recognised as critical technologies for national security, governance, and economic development. The announcement of the National Geospatial Mission in the Union Budget 2025 marked an important step towards strengthening India’s geospatial infrastructure and data ecosystem,” said Agendra Kumar, managing director, Esri India.