GST Council Sets Launchpad For Spacetech Startups With 0% GST Regime

In a major boost to the Indian spacetech ecosystem, the Union government on Tuesday (July 11) exempted startups offering satellite launch services from goods and services tax (GST). 

The announcement was made by Finance Minister Nirmala Sitharaman following the recommendations of the 50th meeting of the GST Council. The move has specifically been undertaken to encourage budding startups in the burgeoning spacetech arena. 

“It has been decided that the GST exemption on satellite launch services supplied by ISRO, Antrix Corporation Limited and New Space India Limited (NSIL) may be extended to such services supplied by organisations in the private sector also to encourage startups,” said an official press release. 

However, it was not clear whether other aspects of the spacetech ecosystem such as manufacturing and satellite operation would also be exempted from the tax levy. 

The development is expected to bring much-needed cheer to the homegrown spacetech ecosystem. Welcoming the move, Java Capital cofounder and Partner Vinod Shankar termed the exemption a positive development. He also told Inc42 that the move will encourage the ecosystem and will spawn the rise of more private enterprises in the emerging space. 

Java Capital counts spacetech startup AgniKul as one of its portfolio companies. 

“The exemption will also encourage more investment in the space sector and is good news for firms investing in satellite or space technology. However, I do not expect a direct impact on investors because investors have other major aspects also to look into before capital infusion. However, it is a sign of encouragement for investors to invest more into companies in space and satellite startups,” Shankar said. 

This comes barely a week after Minister of State (MoS) for Science and Technology Jitendra Singh termed the role of the private sector pivotal to the country’s space economy. He also said that the number of spacetech startups in the country had risen to 140 in a short span of time on the back of liberalised space policies. 

The GST exemption is expected to give further impetus to the homegrown spacetech sector, which has made rapid strides in the past few years. As per Inc42, Indian spacetech startups have raised more than $205 Mn in funding since 2014. 

Besides, a clutch of homegrown players has raised big funding rounds in the past year, offering services and products at competitive prices compared to their global peers. For instance, Pixxel has bagged $71 Mn so far from investors while SatSure secured an undisclosed amount of cash infusion from a coterie of banks, including ICICI Bank, Kotak Mahindra Bank, and HDFC this year. 

As the industry gathers further steam, the local spacetech startups are looking at a $77 Bn market opportunity by 2030.