India’s drone industry gets a GST boost

India’s unmanned aerial vehicle (UAV) industry has received a major policy boost with the Centre’s decision to rationalise Goods and Services Tax (GST) rates on commercial drones.

Speaking to businessline,, industry insiders described the move as a catalyst to improve affordability, simplify compliance, and drive faster adoption of drone technology across critical sectors.

The decision to rationalise the rate was taken during the 56th meeting of the GST Council, which approved a restructured “Simple Tax” regime.

Accordingly, this new structure introduces two primary slabs—5 per cent and 18 per cent—while maintaining a separate 40 per cent rate for certain demerit goods.

The revised rates are scheduled to take effect from September 22, 2025.

For the drone sector, the council introduced a uniform 5 per cent GST rate for commercial drones—combined with a complete exemption for defence-related drones, high-performance batteries, and critical communication equipment.

Previously, the tax structure for drones was inconsistent and fragmented.

As such drones equipped with integrated cameras attracted an 18 per cent GST rate, while personal or recreational drones were taxed at up to 28 per cent. In contrast, drones without integrated cameras were taxed at just 5 per cent.

The rate discrepancy not only created pricing distortions but also led to compliance hurdles and regulatory ambiguity for both manufacturers and buyers.

According to Smit Shah, President of the Drone Federation of India, the rationalisation of GST rates is a landmark reform for the country’s drone ecosystem.

“By reducing GST on commercial drones to 5 per cent and exempting military drones, high-performance batteries, and software-defined radios, the government has recognised drones as both an economic opportunity and a strategic necessity,” he stated.

Shah further emphasised that the move would significantly reduce acquisition costs, thereby enabling wider adoption across sectors such as agriculture, logistics, and public governance.

Additionally, he pointed out that this reform strengthens India’s aspirations to become a global hub for indigenous drone innovation.

In addition to its economic significance, the reform carries strategic implications, as drones play an expanding role in surveillance, precision farming, last-mile logistics, infrastructure monitoring, and disaster response.

At present, India has over 600 drone start-ups which have already raised more than $500 million in funding.

The streamlined GST regime, Shah added provides the policy clarity needed to support scale, attract further investment, and bolster India’s competitiveness in the global drone market.

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Published on September 4, 2025

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