Budget 2024: Aerospace in India Seeks Duty Exemptions and R&D Boost
The growing engagement of the private sector and the thriving startup ecosystem in India's aerospace sector has prompted stakeholders to urge the central government to waive customs duties on crucial materials, components, and subsystems essential for missions. Additionally, there are calls for the establishment of specialized funds to address research and development requirements in the interim budget for 2024-25, which Finance Minister Nirmala Sitharaman is set to unveil on February 1.
“The imposition of customs duties, which can be as high as 40%, presents a significant challenge for startups operating on tighter budgets. This financial burden restricts their ability to experiment, learn, and refine their technologies, ultimately impeding innovation in the sector", said Anirudh Sharma, Chief Executive Officer, Digantara.
The establishment of the Indian National Space Promotion & Authorisation Centre (IN-SPACe) and NewSpace India Ltd (NSIL) in recent years has created an avenue for greater involvement of the private sector, with the Indian Space Research Organisation assuming a mentoring role. Despite these advancements, there are calls for additional initiatives to enhance collaboration between DRDO (Defence Research and Development Organisation) laboratories, startups, and the private industry.
“In alignment with the Indian National Space Promotion and Authorisation Centre (IN-SPACe) in space, the government should establish an independent nodal agency to facilitate collaboration between DRDO labs, startups, and the private industry in the aerospace sector", said Rohit Chouhan, Chief Executive Officer, Nabhdrishti Aerospace. While a ‘Space Policy’ has been unveiled by the government, its focus mostly remains on satellite launches and associated infrastructure.
More avenues for funding research and development and for the overall growth of the sector remain key demands amongst stakeholders. “The stakeholders and agencies should also seriously look at the spending on R&D which has been coming down as a percentage of the total expenditure. For India to emerge as a powerhouse in the aerospace and defence sector, we must be innovative and competitive and create IP (intellectual property) value within the country. R&D spending must flow down to Startups, MSMEs, and academia as well for holistic growth of the entire ecosystem", said Apurwa Masook, Founder and Chief Executive Officer, SpaceFields.
In the budget estimates for 2023-2024, the allocation for the Department of Space, encompassing central sector schemes and initiatives like the Gaganyaan space flight program, amounted to Rs 12,543.9 crores. Stakeholders are eagerly anticipating the budget allocation for the upcoming financial year, and an anticipated increase in funding would be advantageous for the sector. Masook has advocated for the establishment of sovereign funds that are stage-agnostic and focused on specific themes to mitigate risks in the sector.
“As aerospace engineering & manufacturing showed significant growth in the last two years, the industry needs a substantial budget increase for 2024. The AatmaNirbhar Bharat Abhiyaan has been a game-changer for the industry, and we hope for policies that further fuel growth, promote competitiveness, and enhance credit access for startups and MSMEs", said Pavan Ranga, Managing Director, Rangson Aerospace.
