No certifying authority, no exemptions: Space startups struggle to claim customs relief

GST rates and exemptions are based on the recommendation of the GST Council which is a constitutional body comprising of representatives of the Union and State/UT governments

India’s burgeoning space-tech startups are struggling to claim customs and integrated goods and services tax (IGST) exemptions for satellite components, as procedural ambiguities within the Department of Space (DoS) hinder access to the benefits.

Startups applying for concessions found no clear point of contact or operational process within the DoS to facilitate their applications. The existing authority within the department primarily handles internal procurements, not commercial space missions, the startups said.

"Yes, we did attempt to apply for the customs duty and IGST exemptions for our satellite components under Serial Numbers 539 and 539A. We were unable to proceed with the application due to the absence of a well-defined operational process," Digantara CEO Anirudh Sharma said.

Serial number 539 refers to satellites and payloads, as well as ground equipment used for testing them. Serial number 539A, listed directly after, covers scientific and technical instruments, equipment, raw materials required for launching satellites and rockets and so on.

Hyderabad-based Dhruva Space has not attempted to avail these concessions because of the same reason. Keyur Gandhi, Director - Space Regulatory and Legal at Hyderabad-based Dhruva Space said, "We are unable to get any exemptions mentioned in the budget as there is no certifying authority identified within DoS."

Gandhi said that the startup, through industry associations, has requested for appointment of an authority within DoS to certify imports relating to commercial space projects as well.

"While the policy intent as articulated in the Lok Sabha proceedings is clear and commendable, the lack of implementation guidelines has effectively rendered these benefits inaccessible. We are unable to avail the exemptions due to procedural ambiguity," Digantara's Sharma said.

He said that the startup is eagerly waiting for the appointment as it would enable them to build their satellite bus in India instead of the United States.

Dhruva Space's Gandhi said, "We expect that the Government allows self certification of imports by space companies for availing the customs exemption or at least appoint a competent authority which can provide this certification in a time bound manner.

There is also a scope for addition of new harmonised system (HS) codes to specifically identify certain items used in space technology products and accordingly assign tariff to relevant goods," he added.

Moneycontrol has reached out to space regulator Indian Space Promotion and Authorisation Centre (IN-SPACe) and other space tech startups with queries on the matter and the article will be updated when a response is received.

In August 2024, minister of state in the Ministry of Finance Pankaj Chaudhary informed the Parliament that based on the recommendation of the GST Council in its 50th meeting, all satellite launch services including private satellite launch services have already been fully exempted.