The Indian space tech start-up ecosystem welcomed the move by the GST Council that has exempted start-ups offering satellite launch services by private players.

In a major boost, the goods and services tax (GST) Council in a statement said after its meeting on July 11, “It has been decided that 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 start-ups.”

According to a report by Ernst and Young (EY), the space launch segment is expected to grow rapidly by 2025 at the rate of 13 percent per annum.

The move was hailed by the Indian start-up ecosystem. Awais Ahmed, CEO, Pixxel, said that with GST being zero, ISRO and other private launch providers can be extremely cost competitive which is a big boost to the industry.

“With the GST now being zero, ISRO and other private launch providers can be extremely cost competitive which is a big boost to the industry as well as to companies like us that plan on deploying tens of satellites into orbit in the coming years. A very welcome move to boost the space industry further, which is a critical sector to our country’s geopolitical self-resilience,” he said.

‘Unfair cost advantage’

Yashas Karanam, Director & CEO, Bellatrix Aerospace said that Indian companies had to pay 18 per cent GST on launching their satellites on ISRO’s rockets, whereas foreign companies did not, as they were exempt from getting taxed in India, which was an unfair cost advantage to foreign companies.

“As long-term advocates of this relaxation since 2016, Bellatrix is deeply appreciative of the remarkable development of extending the GST exemption for satellite launches to the private sector. We are confident that this move will be welcomed by all stakeholders in the Indian space-tech ecosystem,” he said.

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“In some cases, Indian companies were even considering opening a foreign entity to contract the launch to ISRO and save the 18% additional cash out. It is also interesting that the exception has also been extended to launches offered by Indian private sector players, thus ensuring they also have a level playing field with ISRO/NSIL in terms of their costs,” he added.

The move has been welcomed by venture capitalists such as Merak Ventures, which focuses on investments in the deep tech segment.

“This exemption heralds a new era for India’s space tech ecosystem, slashing satellite launch costs and spurring investment and innovation. It’s an exciting shift that will not only boost competitiveness and affordability but also generate demand across sectors. Such forward-looking decisions foster a fertile landscape for start-ups to thrive, draw global players into partnerships, and propel India towards leadership in the global SpaceTech arena,” said Sheetal Bahl, Partner, Merak and growX Ventures.

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