Drone News

Defense Gear Tax Abolished, Drones Now Cheaper with 5% GST

Posted by

Pradipta V Mukherjee

September 5, 2025

On September 5, 2025

The government has announced wide-ranging changes to the Goods and Services Tax (GST) regime, eliminating levies on a number of military equipment categories and significantly lowering taxes on drones in a historic move to fortify India’s defense and technology ecosystem.

The Nil GST category now covers a broad range of defense assets, including military transport aircraft like the C-130 and the jointly built C-295. Additionally, missiles launched from ship-launched missiles, fighter jet ejection seats, deep submergence rescue systems, underwater vessels, GSAT, and remote piloted aircraft are exempt. Tax burdens have also been removed from other essential items like testing apparatus, cannon and rifle spare parts, and rockets with a calibre of 100 mm.

The government has lowered the GST rates on a number of other categories in addition to these exemptions. The GST rate for walkie-talkies, tanks, and armored vehicles has decreased from 12 percent to 5 percent, while software-powered radio devices that were previously subject to 18–28 percent tax now only pay 5 percent.

Drones, however, have seen the biggest cut. Drones, which were previously subject to a steep 18–28 percent tax, are now subject to a 5 percent tax. With benefits spanning logistics, agriculture, mapping, surveillance, and defense, this reform is anticipated to drastically reduce costs for manufacturers, operators, and end users.

The elimination of GST on flight and target motion simulators will lower the cost of pilot training for the aviation industry, enabling airlines and academies to purchase cutting-edge training equipment at a lower price.

This decision will benefit the drone industry in particular. The government has opened the door for increased adoption and innovation by lowering taxes, which has made drones more affordable for startups and large corporations. The action is also in line with the goal of creating an Atmanirbhar Bharat, increasing domestic manufacturing, and establishing India as a major hub for drone technology worldwide in the years to come.

This optimism is supported by the market outlook. India’s drone market, estimated to be worth USD 0.47 billion in 2025, is expected to grow at a compound annual growth rate (CAGR) of almost 24% to reach USD 1.39 billion by 2030. The industry is expected to be worth between INR 120 and 150 billion (USD 1.5 and 1.9 billion) by 2026, according to even more ambitious government estimates.

The most recent GST reforms are expected to boost India’s self-reliance in defense and advanced technology, ease operating costs, and speed up domestic manufacturing by streamlining taxes across vital sectors.

Pradipta V Mukherjee

CEO, Mavdrones

Pradipta V Mukherjee is the visionary CEO of Mavdrones & Drone Pathshala, driving innovation and growth in the drone industry. With a passion for advanced technology, he leads the company's strategic direction, ensuring Mavdrones stays at the forefront of drone solutions. Under his leadership, Mavdrones has achieved remarkable success, including winning the 'Best Innovation and Technology in Drone Industry' award from ASSOCHAM. Pradipta is committed to revolutionizing the industry through advanced UAV technology, fostering a culture of excellence and forward-thinking within the organization.