ISpA Shares Space Industry’s Recommendation for Upcoming Union Budget 2023
Lt. Gen. AK Bhatt (Retd.), Director General, Indian Space Association, writes to SMEStreet to illustrate the top 8 recommendations for the Hon'able Finance Minister ahead of Union Budget 2023.
The Space industry has made significant strides in advancing the country’s space capabilities and making a mark on the global stage. This is the result of the landmark decision taken by our Hon’ble PM Narendra Modi in June 2020 to open our Space industry to private sector.
With these recommendations, we aim to put forward the suggestions received from Space industry on tax policies and incentives to promote investment, research and development, and employment in the space sector.
Key recommendations by ISpA:
- Production Linked Incentive (PLI) Scheme for the Space industry – The PLI scheme will promote research and development in India and provide incentives to entities engaged in the space sector.
- Financial support from Government through loan & grants and tax incentives etc. – Tax incentives for companies and organizations operating in the space sector, this may include reduced corporate tax rates, tax credits for research and development expenses, and other forms of financial support. Since the new space policy is in its final stages of development, the provision of tax exemption for Startups should be continued till the time the incumbent Policy is released/implemented.
- Parity in treatment of capital gains for shares of unlisted companies- Considering that most space-tech companies in India are startups and access to capital is an issue, it would be beneficial to create parity in terms of the short-term capital gains tax rate and treatment with respect to listed and unlisted entities.
- GST exemption for private satellite launch service providers – GST exemption for provision of satellite launch services must be provided to all the parties who are in the process of providing such services. This would result into creation of a level playing ground for the entire industry. The government may also consider providing deductions or credits for companies that incur these costs as part of their operations in the space sector. These measures are aimed at encouraging employment generation and supporting the growth of private satellite launch service providers.
- Space Technology Parks to support ‘Atmanirbhar Bharat’ for space- The development of a Space Technology Park (STP) ecosystem will create a thriving environment for commercial organizations of all sizes, including startups working on new space technology, and will allow the Indian government and industry to develop and improve products and services related to the space industry.
- Group of experts for the Space Ecosystem Usage- Creating a pool of experts who can advise to government departments/various ministries on usage of various existing space technology effectively.
- Exemption from Angel Tax- Considering that most space-tech companies in India are startups and access to capital is an issue, it would be beneficial to exempt them from the angel tax bracket altogether as part of its efforts to support the growth of the space industry in India.
Overall, these measures are intended to create a more favorable environment for companies and organizations operating in the space sector, and to encourage investment, research and development, and employment in this growing industry with the goal of making India a global hub to produce space-based products.