India’s Space Sector Seeks Infrastructure Status to Unlock Capital

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India’s private space industry is urging the government to formally classify space and satellite infrastructure as critical infrastructure in the Union Budget 2026–27, arguing that the move is essential to unlock long-term capital, lower financing costs, and scale domestic manufacturing.

The demand comes from the Indian Space Association (ISpA), which represents private space and satellite companies, and Deloitte India, following a joint assessment of structural bottlenecks facing the sector.

The push builds on the government’s decision to open the sector to private participation under the Space Policy 2023. Industry executives said the next phase of growth will depend on fiscal and financial architecture.

ISpA said India’s space sector is entering a decisive growth phase but remains structurally disadvantaged in access to finance because of its capital-intensive nature and long gestation cycles, typically ranging from five to seven years.

A Reality Check

Unlike roads, power, or telecom, space assets in India do not currently enjoy formal infrastructure status. As a result, companies face higher borrowing costs and limited access to long-tenor capital, even though comparable global ecosystems treat space assets as strategic or critical infrastructure.

According to the industry body, formal infrastructure classification could reduce the cost of capital by an estimated 2–3 percentage points by enabling access to infrastructure-grade financing, including bank lending, development finance institutions, and bond markets.

Space infrastructure underpins a wide range of civilian and strategic applications, including telecommunications, navigation, defense, weather forecasting, disaster management, financial services, and governance platforms, ISpA said.

ISpA has asked the government to include “Space and Satellite Infrastructure” as a distinct category under the Harmonised Master List of Infrastructure Sub-Sectors notified by the Ministry of Finance in consultation with the Reserve Bank of India.

The proposed sub-sector would cover launch vehicles and spaceports, satellite manufacturing and integration facilities, ground stations, telemetry tracking and control networks, mission control centers, earth observation and communication constellations, navigation systems, and space situational awareness networks.

Such recognition would allow space companies to access long-term bank credit, development finance from institutions such as NaBFID, infrastructure bonds with tax incentives, viability gap funding, and insurance and credit-enhancement instruments.

The industry body also called for a stronger role for private firms in government procurement. Pointing to international benchmarks, ISpA noted that agencies such as NASA and European Space Agency rely predominantly on industry-led execution models for space systems and missions.

ISpA has proposed that at least half of government procurement for space-based services, hardware, and missions be sourced from Indian private entities.

To strengthen domestic manufacturing, the association has asked for production-linked incentive schemes covering satellites, launch vehicles, space-grade components, and critical subsystems, along with research and development tax credits in the range of 20–30% for qualifying space-sector R&D.

Data security and geospatial controls

With satellite-derived data increasingly used across governance and commercial applications, industry representatives stressed the need for standardization and security.

ISpA recommended that central ministries, state governments, and urban local bodies procure satellite imagery and geospatial data only from empanelled Indian companies.

It also called for a geo-tagging framework for space entities and authorized users, with access to sensitive satellite data restricted to verified, geo-tagged entities to ensure regulatory compliance and national security.

Krishanu Acharya, co-founder and chief executive of Suhora Technologies, a satellite data analytics firm, said the upcoming budget should focus on scaling the downstream space economy, especially the conversion of satellite data into operational use.

“We expect targeted measures to accelerate the downstream space economy, particularly in converting satellite data into actionable insights for defense, agriculture, disaster management and climate resilience,” Acharya said.

He said budget allocations should move beyond pilot projects and enable faster government procurement through smaller contracts and multi-year programs that integrate private space solutions into ministries such as agriculture, disaster management and urban development.

Acharya also called for expanded central venture and innovation funding for the sector, building on the ₹1,000-crore space startup fund announced earlier. He said this should include co-investments, R&D grants focused on AI-driven geospatial applications, and shared national earth observation data infrastructure to reduce capital costs for analytics companies.

Separately, Agendra Kumar, managing director of Esri India, a geospatial software company, said adequate funding would be critical to turn recent policy announcements into operational capability.

“Geospatial technologies are being recognized as critical technologies for national security, governance and economic development,” Kumar said, referring to the National Geospatial Mission announced in the Union Budget 2025.

He said faster rollout and sustained funding would be needed to modernize national mapping and positioning systems, standardize data systems and support programs across ministries.