Union Budget 2026-27: space budget recovers but misses crucial private sector reforms Premium

The Union Budget 2026-27 boosts India's space program but overlooks vital private sector reforms needed for growth.

The Indian space program has moved out of its post-pandemic slump and is entering a phase of sustained, if also cautious, consolidation.

Since 2012-2013, the national space budget has grown by 182%. This sounds massive but most of the growth actually happened in the last decade, especially between 2014 and 2019. Allocations have increased more slowly in the last five years. In fact, for a while, the 2019-2020 expenditure of ₹13,017 crore was like a high-water mark that the Department of Space struggled to exceed in actual spending terms, thanks to the COVID-19 pandemic and delays due to missions being rescheduled.

The 2026-2027 budget estimate is now 5.3% higher than the pre-pandemic peak, indicating that the ‘lost years’ of the pandemic are officially over, with the Department finally planning for a scale of operations that actually exceeds its previous historical maximum. In fact, if the expectation for NewSpace India, Ltd. (NSIL) to generate ₹1,403 crore from its own internal resources is included, the expenditure on the total space ecosystem is currently around ₹15,000 crore.

That said, the fiscal roadmap also reveals a disconnect between the government’s rhetoric on privatisation and financial reality. The budget numbers suggest the state-led programme is stabilising, but by focusing almost exclusively on direct budgetary support to the Indian Space Research Organisation (ISRO) and administrative costs for IN-SPACe, the Finance Ministry has overlooked the structural reforms that industry bodies like the Satcom Industry Association-India (SIA-India) and the Indian Space Association (ISpA) have demanded.

Leading up to the budget, these industry associations had coalesced around a specific set of demands designed to make Indian space manufacturing globally competitive. As articulated in pre-budget memoranda submitted by SIA-India and ISpA to the Ministry, the sector desperately needs a production linked incentive (PLI) scheme for space-grade components, echoing the success seen in the mobile manufacturing sector. They further recommended rationalising GST rates for satellite launches to lower entry barriers.

The 2026-2027 Union Budget documents are however silent on these fronts. There is no PLI scheme to subsidise the high cost of domestic manufacturing nor a dedicated ‘space fund’ beyond the administrative allocation to IN-SPACe, the nodal supervisor and promoter of non-governmental entities in the space programme. Instead the government has effectively continued its role as a provider of funds to its own agency, ISRO, rather than evolving into  the sort of facilitator industry representatives have been asking for.