In a significant move to support the spacetech ecosystem in India, the government has exempted startups offering satellite launch services from the goods and services tax (GST). Finance Minister Nirmala Sitharaman announced the exemption following the recommendations made during the 50th meeting of the GST Council. The aim is to encourage the growth of startups in the thriving spacetech sector.
Extension of GST Exemption to Private Sector
The exemption, initially applicable to satellite launch services provided by organizations such as ISRO, Antrix Corporation Limited, and New Space India Limited (NSIL), will now be extended to private sector entities. This inclusive step seeks to foster the development of startups operating in the spacetech domain.
Impact Of GST on Manufacturing and Satellite Operation Unclear
While the exemption applies to satellite launch services, it remains unclear whether other aspects of the spacetech ecosystem, such as manufacturing and satellite operation, will also be exempt from GST. We are awaiting further clarification from the authorities regarding these areas.
Positive Reception and Encouragement for Investors
The spacetech industry and investors have welcomed this move. Vinod Shankar, Cofounder and Partner at Java Capital, hailed the exemption as a positive development that will encourage the growth of the ecosystem. Shankar emphasized that it will stimulate investment in the space sector and motivate investors to back satellite and space technology startups. However, he noted that other factors would also influence investor decisions beyond the GST exemption.
Boost for Spacetech Sector and Market Potential
This announcement comes shortly after Minister of State for Science and Technology, Jitendra Singh, emphasized the pivotal role of the private sector in India’s space economy. He highlighted that the number of spacetech startups in the country has reached 140, driven by liberalized space policies. The indigenous spacetech sector, which has already raised over $205 million in funding since 2014, expects the GST exemption to further propel its growth. The industry has the potential to reach a market worth $77 billion by 2030, with numerous homegrown players securing significant funding rounds and poised for expansion.
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