Budget 2024: SIA-India suggests strategic allocations, incentives for space sector growth

Hyderabad: As Budget 2024 approaches, SIA-India emphasises crucial allocations and incentives to propel India's space sector towards a projected $44 billion market by 2033. Advocating for robust policy measures like production-linked incentives (PLI) essential for fostering indigenous technology, inclusion of space under "Information Infrastructure," and adoption of global standards for satellite accounts, SIA-India aims to strengthen the sustainability and competitive edge of stakeholders in the space industry, including Startup, MSMEs and SMEs.

SIA-India urges a substantial increase in India's space budget to align with global top space-faring nations, alongside dedicated funds for local manufacturing and capability building. The association also stresses on ‘Government procurements’ to ensure fair access and competition, with long-term purchase agreements to stabilise demand. Collaboration between government and private sectors is crucial for expanding satellite capacities, including initiatives like BharatKaSatcom with GSAT-20 and promoting satellite communication technologies through incentivised adoption and investment in infrastructure.

SIA-India emphasises on a Judicious technology approach where the policymakers and regulators need to weigh all the disruptive new-age technologies such as satellite,IMT, HAPS and Wi-fi equally and must create a conducive business ecosystem for the new players.

Recognise the potential of market segments such as rural broadband, enterprise connectivity, maritime, aviation, and disaster management. These sectors present significant growth opportunities for SATCOM services, contributing to GDP growth and enhancing national infrastructure. Portion of the unutilised USOF fund could be allocated for satellite services to improve connectivity and bridge the digital divide in rural/remote areas of the country. Licensed VSAT operators need to be allowed to bid for USOF funding, similar to telecom service providers, in areas where other modes of connectivity are not available.

India must leverage the FDI Liberalisation Policy 2024 to attract foreign investment in manufacturing essential satellite components and operations. Strategic initiatives such as streamlined regulatory processes, robust infrastructure development, and investment incentives are crucial. SIA-India urges increased regulatory and policy support to foster indigenous technology development in India's space sector, aiming to attract substantial foreign investments. This approach not only promotes self-reliance but also addresses the fiscal deficit. Highlighting the significant import-export disparity in FY 2021-22 (₹2,114.00 crore in imports versus ₹174.9 crore in exports), SIA-India proposes:

Furthermore, the association emphasises the implementation of extensive funding programs for deep-tech space startups, modeled after IDEx, along with interest rate subsidies for startup loans to enhance affordability. SIA-India recommends the creation of targeted tax incentives and investment-friendly policies to stimulate private sector participation in high-risk ventures related to deep tech R&D. An extension of the tax holiday period for deep tech startups to at least seven years is proposed.

“The Budget should prioritize measures to propel the Commercial Space Sector, with a focus on nurturing deeptech space startups. Increased funding is crucial, aligning India's space budget with global standards. Tax incentives, interest rate subsidies, and collaborative frameworks between academic institutions and startups are essential to foster innovation, in line with Prime Minister Modi’s vision of 'Sabka Prayas'. Prime Minister Narendra Modi has stressed bold reforms to achieve self-reliance in space technology, emphasising the private sector’s role in driving innovation and national growth. His vision for 'Aatma Nirbhar Bharat' underscores the importance of creating an enabling environment for private companies." - Dr. Subba Rao Pavuluri, President of SIA-India

The reforms should be such to usher in a significant transformation in the ecosystem strengthening the sustainability and competitive edge of stakeholders in the space industry, including Startups, MSMEs and SMEs.The space sector has seen over 204 startups securing $380 million in funding, alongside an impressive 86 per cent increase in the government’s space budget over the past six years. However, India's share remains insignificant in single digits amid the global space market that is valued at $300 billion. A much larger push is expected with a substantial increase in India's space budget, currently around $1.4 billion, to align with global leaders such as the United States, Japan, Russia and China. The proposal also emphasizes the allocation of sufficient resources for an effective cybersecurity system to safeguard valuable space assets.

Given the critical role of geospatial applications in sectors such as defence, disaster management, and urban planning, it is imperative to promote policies that stimulate demand for downstream applications and data. This approach will drive the demand for upstream technologies. Priority should be given to procuring downstream products like satellite data analytics and remote sensing applications to foster innovation and economic growth.

Include strategic incentives to boost domestic demand, other than the effective Production Linked Incentives (PLI) for key components, lower GST rates, tax holidays for space startups, reduced import duties on critical components, and low-interest financial loans. These measures can substantially strengthen the sector. Additionally, integrating space manufacturing into defence offset obligations will ensure sustained funding and maintain market demand.

Additionally, SIA-India advocates for the explicit inclusion of space in the definition of "Information Infrastructure" and calls for a detailed quantitative analysis of the space economy. The adoption of a satellite account aligned with global standards is recommended to ensure accurate measurement, prevent double counting, and boost funding.

"SIA-India remains dedicated to collaborating with the government to develop a vibrant and competitive satellite launch and manufacturing sector hub. These reforms pave the way for India to solidify its position as a key player in the global space arena, fostering technological advancements and economic growth. As India's space sector expands rapidly, SIA-India has initiated a comprehensive Industry Capability Survey to showcase industry strengths, foster collaborations, and facilitate procurement. This effort aims to enhance visibility and forge partnerships with key government and private stakeholders." Anil Prakash, Director-General of SIA-India.