Budget 2023: Satellite makers seek PLI for space sector

Satcom Industry Association of India (SIA-India) has asked the Central government to extend the production linked incentive (PLI) scheme to cover the space sector in the upcoming Union Budget 2023.

A PLI scheme would help the Indian space-tech startups and the existing manufacturers developing spacecrafts, small and nano satellites, satellite communication components, and control systems, sensors, modules, launch vehicles, and propulsion systems, etc. to enter or expand the commercial market segment, SIA-India says. 

The association points out that the suggestion, part of SIA-India’s budget recommendation, will help India become a developed Space Sector ecosystem and an export hub.

The association also sought a tax holiday regime and Goods and Services Tax incentives for organisations and entities engaged in the space sector. “Advancement in technologies, proliferation of data, and the onset of the platform economy has led to a need for greater private participation in the sector. The space sector has significant potential for growth and can act as a catalyst in attracting new investments, increase employment for the skilled workforce, facilitate and boost ‘Make in India’ initiative. An extension of corporate tax incentive or tax holiday under the provisions of the Income tax laws along with policies on Space Tech parks / existing manufacturing setups be treated as deemed Special Economic Zone (SEZ) would help initiate the development of the space industry”, the pre-Budget memorandum of the association says.  

Taxation jurisdiction over space activities is another issue that has been brought up by SIA-India before the finance minister. The association points out that in the absence of clear taxation statutes over space activities may lead to doubt taxation on commercial space activities. “It is imperative that the question of jurisdiction to tax is specifically laid down in taxing statutes as activities that are otherwise outside the jurisdiction of India, could, for purposes of national security, be treated as falling within India’s jurisdiction in other legislations. Having a specific policy towards jurisdiction to tax within the tax enactments itself will avoid different government regulators taking contrary views on India’s jurisdiction to tax or regulate a specific space activity. The taxation guidelines should ensure that there is no double taxation and nations with overlapping jurisdictions do not subject the same satellite-based services or the same taxable event to tax twice,” the industry body says.

SIA-India also wants the Budget to increase deduction and tax concessions on research and development, level playing exemptions for private players, additional depreciation, certainty on taxation, employment generation, etc. for increasing the overall attractiveness towards the sector.