Paper: GS – III, Subject: Science and Technology, Topic: Space Technology, Issue: India’s Space Budget 2026-27.
Context:
In the Union Budget 2026–27, the Indian space sector witnessed a paradox, while the state-led program received a funding boost to enter its most capital-intensive “build phase,” the private sector’s core structural demands remained largely unaddressed.
Key Takeaways:
Budget Overview and Trends:
- Growth and Consolidation: The Indian space program is recovering from the pandemic slump and entering a phase of consolidation.
- Budget Growth: The national space budget has grown by 182% since 2012-2013, with most growth occurring between 2014 and 2019.
- Post-Pandemic Recovery: The 2026-2027 budget estimate is 5.3% higher than the pre-pandemic peak, indicating a recovery in operations.
- Total Expenditure: Including New Space India, Ltd. (NSIL) internal resources, the total space ecosystem expenditure is around ₹15,000 crore.
| Department of Space Allocation (2026-27): ₹13,705.60 crore for the Indian Space Research Organisation / Department of Space, up from ₹12,448.60 crore in the previous year — a roughly 10% year-on-year increase mainly driven by higher capital expenditure. |
Disconnect Between Rhetoric and Reality:
- Privatization vs. Budget: The budget numbers reveal a disconnect between the government’s privatization rhetoric and financial reality.
- Focus on ISRO: The budget focuses on direct budgetary support to the Indian Space Research Organisation (ISRO) and administrative costs for IN-SPACe.
- Overlooked Reforms: The Finance Ministry has overlooked structural reforms demanded by industry bodies like the SatCom Industry Association-India (SIA-India) and the Indian Space Association (ISpA).
Industry Demands and Expectations:
- Production Linked Incentive (PLI) Scheme: Industry associations demanded a PLI scheme for space-grade components, similar to the mobile manufacturing sector.
- GST Rationalization: They recommended rationalizing GST rates for satellite launches to lower entry barriers.
- Budget Silence: The 2026-2027 Union Budget is silent on these fronts, with no PLI scheme or dedicated space fund beyond IN-SPACe’s administrative allocation.
- Government’s Role: The government continues its role as a provider of funds to ISRO rather than a facilitator for the industry.
Venture Capital Fund Limitations:
- Venture Capital (VC) Fund: The Finance Ministry announced a dedicated VC fund of ₹1,000 crore for the space sector to boost the space economy.
- Equity Investment vs. Structural Support: ISpA and SIA-India differentiate between equity investment (which the VC fund provides) and fiscal or structural support.
The budget effectively doubles down on ISRO’s roadmap and planetary science but maintains an “inertia model” for the private sector. Private firms are largely being treated as “second-grade” suppliers for state designs rather than being empowered to build their own global intellectual property.
Source: (The Hindu)
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