Budget 2026: India’s space startups want long-term EO deals, lower taxes and PLI support

With the upcoming Budget 2026 on the horizon, India's private space startups are urging the government for stable procurement processes, tax reforms, and manufacturing incentives to enhance their Earth observation (EO) capabilities. This appeal follows a significant increase in the Department of Space's budget last year, which rose by nearly 14% to ₹13,416.20 crore, aimed at supporting major initiatives like Chandrayaan-4 and the Venus Orbiter Mission. Despite India's reputation as a cost-effective global launch hub, founders emphasize that technical expertise alone won't secure market dominance without a consistent demand and reduced operational costs. Awais Ahmed, CEO of Pixxel, highlighted the critical need for long-term contracts from the government. He stated, "A predictable, long-term procurement program for both satellites and EO data would unlock potential. If government ministries could commit to multi-year agreements for data purchases in sectors like agriculture and disaster management, it would empower companies like Pixxel to expand at a faster pace." Ahmed further explained that establishing clear budgets for purchasing commercial EO data, along with transparent tendering processes and quicker contract cycles, would facilitate a transition from pilot programs to widespread national applications. This would reinforce the creation of larger satellite constellations, ensuring reliable access to high-quality Earth intelligence. Earlier this year, Pixxel entered into a partnership with the Indian National Space Promotion and Authorization Center (IN-SPACe) to establish India's first privately-led national EO constellation. As part of this public-private partnership, Pixxel, along with a consortium of three other Indian firms, plans to invest over ₹1,200 crore over the next five years to deploy a constellation of 12 satellites. The startups also highlighted the challenges posed by indirect taxes and the classification of components, which contribute significantly to operational costs. Ahmed pointed out that essential ground infrastructure, including antennas and testing equipment, represents a considerable financial burden. He suggested that providing GST exemptions on such equipment would alleviate initial capital constraints, allowing for greater investment in software and analytics. From a regulatory perspective, Keyur Gandhi, Director of Space Regulatory and Commercialization at Dhruva Space, called for clearer tax classifications. He emphasized the importance of creating specific codes for space-grade components to reduce GST burdens, enhance local value addition, and lessen dependency on imports. Skyroot Aerospace's co-founder, Pawan Kumar Chandana, echoed the sentiment for increased localization in manufacturing, aiming for 100% local value in their projects. Additionally, startups are seeking targeted funding for advanced missions and clearer foreign direct investment (FDI) regulations to attract strategic partners. Chandana stated, "For India to emerge as a key player in the global space economy, a robust space-tech industry is essential, one that regularly launches rockets and develops its own satellites. A production-linked incentive for the space sector would significantly propel this objective forward."