Budget 2026: Indian space sector seeks critical infra status to attract investments
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Indian Space Association (ISpA), representing private sector industry in space sector, has urged the government to recognise the sector as ‘critical infrastructure’ in the forthcoming Union Budget 2026-27.
'Critical infrastructure' status to unlock scale
Stating that India's space sector remains structurally disadvantaged in access to finance due to its capital-intensive nature and long gestation cycles of 5-7 years, the industry body said ‘critical infrastructure’ status will unlock scale, private investment, and global competitiveness in Indian space sector. “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”, said Lt Gen Anil Kumar Bhatt (Retd.), director general, ISpA.
“Space infrastructure underpins telecommunications, defence, navigation, finance, weather forecasting, disaster management, and governance. Formal recognition will enable infrastructure-grade financing, reduce cost of capital by 2-3%, and strengthen national resilience”, he added
In a pre-Budget memorandum, ISpA wanted the government to include “space & satellite infrastructure” under the Harmonised Master List of Infrastructure Sub-Sectors notified by the Ministry of Finance and RBI. This segment should cover launch vehicles and spaceports, satellite manufacturing and integration facilities (LEO/MEO/GEO), ground stations, mission control centres, Earth Observation and communication constellations, navigation systems and space situational awareness (SSA) networks, the industry body said.
Critical infra status to provide access to long-term bank lending
The critical infrastructure status will provide access to long-term bank lending and DFI financing, infrastructure bonds with tax benefits, Viability Gap Funding (VGF), insurance and credit-enhanced instruments, it said.
ISpA also wanted the government to create demand by announcing a 50% government procurement mandate for the space sector. “Predictable demand is the single most powerful driver of private investment. While Indian private players now possess proven capabilities across satellites, launch systems, EO data, and ground infrastructure, lack of assured government demand constrains scaling. A formal procurement mandate will anchor industry growth while allowing ISRO to focus on strategic and exploratory missions”, ISpA DG Bhatt said.
January 2026
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The association wants the government to offer a tailored fiscal framework distinct from conventional manufacturing for the space sector due to high upfront costs, rapid technological obsolescence, and delayed revenues.
The industry body also called for introduction of PLI schemes for satellites, launch vehicles, space-grade components, and critical subsystems, five-year tax holiday for space manufacturing, launch services, and space-based service providers, R&D tax credits of 20-30% for qualifying space-sector R&D, capital investment tax credits for launch pads, ground stations, and satellite production plants and accelerated depreciation on satellites, rockets, and launch-related hardware.