India’s space and geospatial sector have sought fiscal and policy interventions to support a fast growing but capital-intensive industry. Since policy liberalisation, structural issues around taxation, financing and demand creation continue to constrain scale.
The Space Industry Association of India (SIA-India), has called for closer alignment between fiscal policy and the economic realities of space activities.
“Representing satellite operators, launch service providers, manufacturers, startups and downstream service companies, the association acknowledges that as the sector transitions from a largely mission-centric model to a globally competitive commercial space economy, our fiscal frameworks must evolve to reflect the capital-intensive, long-gestation nature of space investments. Recognising space as critical national infrastructure is central to this shift,” said Anil Prakash, Director General, SIA-India.
According to the association, the proposed measures are aimed at reducing import dependence, strengthening domestic capabilities and positioning Indian firms to capture a larger share of the global space market, estimated at over USD 600 billion.
Indirect tax burden flagged as key constraint
Taxation of space hardware and services has emerged as a major concern ahead of the Budget. Sreeram Ananthasayanam, Partner, Deloitte India, pointed to the impact of Goods and Services Tax (GST) and Customs Duty on ground systems, satellite components and launch vehicle subsystems.
“Ground systems and satellite launch vehicle components form an integral part of India’s space ecosystem, which is rapidly transitioning towards greater private sector participation. At present, the levy of Customs Duty and GST on such critical equipment increases the overall project cost and working capital burden for space-tech companies, especially in the early stages of product development and testing,” he said.
He added that satellite-based service providers offering mapping, imaging, geo-tagging and other data-driven services often face blocked input tax credits, which turn GST into a direct cost. Extending Customs Duty and GST exemptions to these segments, he said, would ease cash-flow pressures, support domestic manufacturing and make Indian launch and satellite services more competitive globally. Since satellite launch services are already exempt from GST, similar treatment for inputs would also ensure consistency across the value chain.
SIA-India has separately flagged classification ambiguities, customs delays and the absence of dedicated HSN and SAC codes for space-grade components, warning that these issues can inflate project costs by double-digit percentages.
Rs 1,000 crore space venture fund
Access to early-stage capital remains another friction point for private spacetech companies. The stakeholders have urged the government to operationalise and expand the Rs 1,000 crore space venture fund announced earlier.
Stage-wise allocations across seed, early and growth phases have been proposed. And there is a focus on space hardware, earth observation analytics, satellite communications and NavIC-based applications.
The aim, according to the proposals, is to mobilise at least 2.5 times private capital alongside public commitments and reverse the funding slowdown seen in 2024, restoring annual venture flows to above 2023 levels within two years. Industry representatives argue that without government-anchored risk capital, many deep-tech ventures struggle to move from prototype development to commercial scale.
Recognising space as critical infrastructure
In a broader set of recommendations prepared by the Indian Space Association (ISpA) along with Deloitte India, the industry has urged the government to formally recognise space assets as “critical infrastructure”. While several global peers classify space systems as strategic infrastructure, India’s space ecosystem currently lacks such status, limiting access to long-term, low-cost financing.
ISpA has proposed including “Space and Satellite Infrastructure” under the Harmonised Master List of Infrastructure Sub-Sectors, covering launch vehicles, spaceports, satellite manufacturing facilities, ground stations, navigation systems and space situational awareness networks. Formal recognition, the association argues, could reduce the cost of capital and enable infrastructure-grade financing through banks, development finance institutions and bonds.
Public Procurement
ISpA has recommended mandating that at least 50 percent of government procurement for space-based services, hardware and missions be sourced from Indian private entities, where viable domestic capability exists.
This proposal includes satellite manufacturing, earth observation data and analytics, satellite communication services, ground infrastructure and launch subsystems.
And several ministries including defence, agriculture and urban affairs have been identified as possible customers.
Geospatial adoption and mission-mode implementation
Geospatial technology has also featured prominently in Budget expectations. Agendra Kumar, Managing Director, Esri India, said the National Geospatial Mission announced in the Union Budget 2025 needs adequate funding to move from intent to execution.
“Geospatial technologies are being recognized 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,” he said.
Industry recommendations also include outcome-linked funding for state-level adoption, mandatory integration of satellite imagery into platforms such as PM Gati Shakti, and wider deployment of NavIC-enabled devices across government programmes.
Startups seek scale-up support and defence demand
From the startup ecosystem, Krishanu Acharya, Co-Founder and CEO, Suhora Technologies, said the upcoming Budget must help downstream space companies bridge the gap between pilots and scale.
“As India prepares for Union Budget 2026–27, we expect targeted measures to accelerate the downstream space economy, particularly in converting satellite data into actionable insights for defence, agriculture, disaster management and climate resilience,” he said.
Acharya called for dedicated budget lines for earth observation analytics, faster procurement cycles, multi-year programmes and expanded co-investment and R&D grants, particularly for AI and machine-learning driven geospatial applications. He also flagged the need for higher defence allocations for satellite data analytics supporting intelligence, surveillance and maritime domain awareness.
Direct tax reforms and R&D incentives
The industry has also proposed a series of direct tax reforms, including extending the startup tax holiday under Section 80-IAC from three to five years for space manufacturing and R&D firms, longer carry-forward periods for losses of up to 15–20 years, weighted deductions for R&D expenditure, and clarity on deductions for licence fees and spectrum usage charges.