The Union Budget 2026–27 has allocated higher funds for India’s space programme, signalling recovery from the pandemic slump. This topic is highly relevant for aspirants following Economy, Science & Tech through IAS coaching in Hyderabad.
Background
- India’s space budget has grown by 182% since 2012–13, with rapid expansion between 2014–19.
- Pandemic years slowed spending; the 2019–20 peak of ₹13,017 crore was difficult to surpass.
- The 2026–27 allocation is 5.3% higher than pre-pandemic levels, showing consolidation.
- Including NewSpace India Ltd. (NSIL) resources, total ecosystem spending is around ₹15,000 crore — often discussed in UPSC online coaching under space sector reforms.
Budget Highlights
- Focus remains on ISRO’s programmes (e.g., Gaganyaan, planetary missions).
- Administrative support continues for IN-SPACe, the nodal body for private sector promotion.
- No new fiscal incentives for private space firms were announced.
Structural Reform Demands Ignored
- Production Linked Incentive (PLI) scheme for space-grade components was requested but not included.
- GST rationalisation for satellite launches was overlooked; current regime imposes hidden 18% tax burden on manufacturers.
- No recognition of the sector as critical infrastructure, which would have enabled cheaper long-term loans.
- Lack of tax holidays or R&D credits to bridge the “Death Valley” between prototype development and commercialisation.
Industry Concerns
- Private firms remain dependent on ISRO, often acting as secondary suppliers rather than innovators.
- High borrowing costs (10–12%) compared to global competitors reduce competitiveness.
- Without liquidity support, disruptive technologies like reusable rockets or satellite IoT may not emerge in India.
- Risk of brain drain as talent may migrate to countries with better financial ecosystems, a concern relevant for civils coaching in Hyderabad aspirants analysing innovation policy.
Previous Initiatives
- In 2024–25, a ₹1,000 crore Venture Capital fund was announced for space start-ups.
- Only ₹150 crore was earmarked for 2025–26, seen as insufficient relative to industry needs.
- While equity support exists, fiscal reforms like GST relief and infrastructure status remain absent.
Conclusion
The Budget stabilises India’s state-led space programme, ensuring ISRO’s missions proceed smoothly. Yet, by neglecting structural reforms such as PLI, GST rationalisation, infrastructure status, and R&D incentives, the government risks slowing private sector growth.
This topic is available in detail on our main website.
