Start-ups welcome Centre's decision to scrap 18% GST on satellite launches from India

The levy of GST on Indian firms had been forcing Indian satellite-builders to launch their satellites from foreign soil using foreign rockets.

Chennai: Indian start-ups in the space sector have welcomed the government’s latest announcement to scrap the 18% GST that is levied on firms launching Indian satellites using ISRO rockets. This levy of GST on Indian firms had been forcing Indian satellite-builders to launch their satellites from foreign soil using foreign rockets.

Ironically, foreign firms were exempt from paying this 18% GST, if and when they wanted to launch their satellites using ISRO’s rockets from India. Often, Indian firms had to register as a foreign company, in order to circumvent the Goods and Services Tax and launch at a lesser cost. The Indian private sector is said to have been in talks with the government for nearly two years to have this GST levy scrapped.

Making the announcement at a Finance Ministry Press Conference on Monday, Finance Secretary Ajay Bhushan Pandey said, lots of start-ups were making satellites in India and that some had to go abroad to use foreign rockets and put them into orbit. “In order to encourage domestic launching of Satellites by ISRO and Antrix Corporation(ISRO’s commercial arm), GST Council has decided that 18pc GST will completely be exempt” he added.

Private players in the Indian satellite industry say that this move is certainly a much-needed boost from the government’s end. Sanjay Nekkanti, Founder, DhruvaSpace said that, for a full-stack space engineering company providing mission-design, satellite manufacturing, launch and integration support, the GST on launch had cost and time implications in competing against the global peers. 

“Launch service is one of the costliest segments in a satellite mission. This move by the government enables us to launch in a cost-effective manner from Indian soil and deliver highly integrated, lifetime support to clients” Nekkanti told Zee Media. He added that his company was keen on ensuring that their upcoming satellites fly on ISRO’s SSLV and PSLV rockets. 

For companies that were forced to choose foreign rockets for their initial satellite launches, this announcement is an incentive to try ISRO’s launch vehicles in the coming times. Awais Ahmed, whose firm Pixxelspace, has booked slots on foreign rockets for their first two launches says that he hopes for the third launch to be done using an Indian (ISRO) rocket.

“The latest announcement paves way for future launches from here and offers us a level playing field. However, as up and coming companies, we would prefer to get merit-based government support via grants and seed funding, as is the case in Japan and Finland,” he told Zee Media.

So far, only a single Indian private company - Satellize, has had their satellites launched into orbit. While their first launch was on-board a SpaceX rocket, their second was using ISRO and they also have two launches due this year. “The tax exemption when launching on ISRO rockets is fine, but what about tax exemption when we choose Indian private rockets? Global launch costs (per Kg of payload) have come down and ISRO’s cost is very high in comparison” Mahesh Murthy of the Exseed Fund for Space, which backed Satellize told Zee Media. 

He added that it would be more prudent if the government opened up the space sector in a manner that allowed global players to launch their rockets from India, given that the subcontinent’s proximity to the equator is best suited for most launch requirements. “We have also been contemplating launching from a barge at sea, in order to avoid prohibitive taxes and rules in India,” Murthy said, hoping that the government would ease the regulations.