ISpA advocates for reasonable Spectrum Usage Charges as a percentage of Adjusted Gross Revenue to avoid excessive fees for satellite operators. (Getty)To stimulate growth, ISpA recommends introducing tax holidays and exemptions for companies in the space sector, particularly those investing in space industrial parksThe Indian Space Association (ISpA), representing private space companies, has put forward a series of recommendations in its latest wish list aimed at bolstering the industry’s financial and overall situation in the upcoming Union Budget 2024-25. These proposals emphasise the need for financial incentives and strategic government support to advance the space sector.Key Recommendations:GST Expansion to Launch Vehicles, Ground Systems, and Critical Satellite Components: While the GST exemption on satellite launch services is appreciated, ISpA suggests extending this exemption to other crucial components, including ground systems and launch vehicles. Additionally, the impact on input tax credit from procuring goods and services should be evaluated to ensure the supply chain benefits fully from the GST exemptions.Tax Holidays and Custom-Duty Exemptions: To stimulate growth, ISpA recommends introducing tax holidays and exemptions for companies in the space sector, particularly those investing in space industrial parks. They also propose concessions on customs duties for specific imports to reduce the financial burden on these entities.Reduction of Tax Rate on Interest from Foreign Borrowings: Acknowledging the capital-intensive nature of the space industry, ISpA suggests lowering the tax rate on interest from foreign borrowings to 5 per cent. This would facilitate more affordable access to foreign funding for crucial projects like satellite manufacturing and the construction of satellite launches and earth stations.Reduced Withholding Tax for Satellite Sector: Currently, a 10 per cent withholding tax applies to payments made to Indian companies providing satellite services. ISpA proposes reducing this tax to 2 per cent to improve profitability and sustainability for satellite operators.Extension of PLI to Space-Grade Components: Drawing inspiration from the PLI scheme for drones, ISpA recommends a similar initiative for space-grade components. This would encourage domestic manufacturing under the ‘Make in India’ initiative, strengthen the supply chain, and attract investments by offering financial incentives based on output.Government Commitment to New Space-Tech Sector: ISpA calls for the government to commit to adopting space technology solutions across various governance areas, such as agriculture, disaster management, and urban development. This commitment would ensure a stable market for space tech firms and improve public service efficiency. A budget announcement for a Digital Public Infrastructure (DPI) and Digital Public Goods (DPG) approach for Earth observation-based geospatial analytics is also recommended.Reasonable Spectrum Usage Charges: With the new Telecommunications Act 2023 allocating spectrum for satellite applications administratively, ISpA advocates for reasonable Spectrum Usage Charges (SUC) as a percentage of Adjusted Gross Revenue (AGR) to avoid excessive fees for satellite operators.Depreciation on One-Time Fees and License Charges for Satellite Operators: ISpA suggests allowing 25 per cent depreciation on the one-time license or spectrum fees and treating annual fees as revenue expenditure. This approach would lower taxable profits, optimizing the tax impact and supporting business operations.Lt. Gen. AK Bhatt (Retd), Director General of ISpA, stated that India’s focus on innovation and a favourable regulatory environment will attract significant foreign direct investment, boosting economic growth and unlocking the $44 billion opportunity.“With the implementation of the above reforms and initiatives, ISpA expects that enhanced investment and technological advancements will drive innovation, fostering a robust ecosystem for startups and established companies in the space industry. The prompt implementation of the Space Activities Act is crucial for addressing legal and standards-related issues, providing a clear regulatory framework for the industry. With the recent reforms and initiatives by the government and the guidelines for implementation of Indian Space Policy 2023 from IN-SPACe, the space sector is at a critical juncture towards the journey to become a global space power in the coming years,” he said.Bhaswati Guha MajumderBhaswati Guha Majumder, Senior Correspondent at News18, has been passionately covering stories related to technology, business (infrastructure), gover…Read More