Business EconomyPosted at: Jan 19 2026 4:53PM


Space sector demands new space Act, infra status, PLI, tax incentives

Chennai, Jan 19 (UNI) A comprehensive new Space Act, statutory position for Indian National Space Promotion and Authorisation Centre (IN-SPACe), infrastructure status for the industry, increasing the foreign direct investment (FDI) limits under automatic route, productivity linked incentive scheme (PLI), tax holiday are some of the 2026-27 union Budget wishlist submitted by the industry body Indian Space Association (ISpA).
ISpA is an industry association of private space companies .
As India stands at the threshold of becoming a global space power, with private sector participation enabled under the Space Policy 2023, the next critical step is fiscal, regulatory and structural support to accelerate growth and position India among the top three spacefaring nations, ISpA said.
ISpA has outlined key private space sector recommendations for government consideration, which aim to boost domestic manufacturing, enhance national security, create high-value jobs and foster global competitiveness while ensuring controlled and secure access to strategic satellite and geospatial data.

India’s space sector is entering a decisive growth phase, yet it remains structurally disadvantaged in access to finance due to its capital-intensive nature and long gestation cycles of 5-7 years. 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.

Space infrastructure underpins telecommunications, defence, navigation, finance, weather forecasting, disaster management, and governance. Formal recognition will enable infrastructure-grade financing, reduce the cost of capital by 2-3%, and strengthen national resilience.

ISpA wants the government to include “Space & Satellite Infrastructure” under the Harmonised Master List of Infrastructure Sub-Sectors notified by the Ministry of Finance and RBI and also notify a separate infrastructure sub-sector covering launch vehicles and spaceports, satellite manufacturing and integration facilities (LEO/MEO/GEO), ground stations, TTC networks, and mission control centres, Earth Observation and communication constellations.
According to ISpA, the government should mandate that at least 50% of all its procurement for space-based services, hardware, and missions be sourced from Indian private entities (NGEs). There should be scope to include satellite manufacturing and payloads, earth observation (EO) data and analytics, SATCOM services and ground infrastructure, launch subsystems and deep-tech components and space situational awareness (SSA) networks. The government should also position its various ministries as anchor customers.
With the growing use of satellite-derived data in governance and commercial applications, standardisation and security are critical. A structured procurement and access framework will support the domestic industry while safeguarding national interests.
As to the financial incentives, ISpA has sought PLI scheme for satellites, launch vehicles, space-grade components, and critical subsystems; provide a five-year tax holiday for space manufacturing, launch services, and space-based service providers; enable R&D tax credits of 20-30% for qualifying space-sector R&D; accelerated depreciation for satellites, rockets and launch-related hardware and capital investment tax credits for launch pads, ground stations, and satellite production plants.
The industry lobby body also wants the government to provide interest subvention, incentives to promote R&D, rationalisation of Goods and Services Tax (GST) enabling full input tax credit (ITC)
India’s space sector must integrate with global value chains while retaining strategic oversight.
Interestingly, ISpA wants the IN-SPACe as the agency to oversee or nod giving agency for many of its proposals.
India stands at a defining moment in its space journey. By recognising space as critical infrastructure, mandating private sector participation, rationalising taxes, incentivising R&D, and strengthening regulatory certainty, the union Budget 2026-27 can decisively shift the Government’s role from provider to partner and anchor buyer, ISpA said.
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Tags: #Space sector demands new space Act# infra status# PLI# tax incentives
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