India’s Drone or 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. Industry experts described the move as a catalyst to improve affordability, simplifying compliance, and fuelling faster adoption of drone technology across critical sectors.
The decision to rationalise the rate was taken during the 56th meeting of the GST Council in New Delhi earlier today (September 4), which approved a restructured “Simple Tax” regime.
The new GST 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 GST 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.
Ankit Mehta, Co-founder and CEO, ideaForge commenting on the standardisation said, “The GST rationalisation is a welcome step and will significantly boost India’s UAV capabilities, across both defence and commercial sectors, accelerating the adoption of UAV technology in mission-critical applications like border surveillance, mapping, inspection, disaster management, and agriculture. With military UAVs now taxed at 0% and commercial drones at 5%, this policy makes it easier for Indian manufacturers to scale operations.”
“The long-term impact will enable drone manufacturers in India to further develop cutting-edge UAV technology, expand defence contracts, and deliver cost-effective, high-performance drones. This is a pivotal step in aligning with the government’s defence modernisation goals and will contribute to a self-reliant defence sector that relies on indigenous technology,” he added.
For the drone sector, the GST 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
Mehta further stated, “At ideaForge, we believe the time is right for widespread and rapid drone adoption, with drones set to play a pivotal role in strengthening surveillance, delivery, governance, and security infrastructure.”
Earlier, drones equipped with integrated cameras were levied 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.
Agnishwar Jayaprakash, Founder and CEO, Garuda Aerospace commenting on the latest move said, “We welcome this landmark move and believe that the reduction of GST to 5% will empower drone-tech companies in multiple ways. For companies like Garuda Aerospace, which strongly believe that indigenous drones are the need of the hour, this reform provides the opportunity to deepen investments in R&D, foster innovation, and scale up manufacturing.”
“Lower costs also enable us to explore entry into new markets, encouraging and promoting the wider use of drones. This move directly improves the affordability of drones for farmers and allied sectors, further boosting the adoption of agri-drones across the country. It is also a step forward for initiatives like NaMo Drone Didi, which promote precision agriculture through drone usage,” he said.
“Moreover, it equips defence and surveillance sectors with cost-effective drone solutions for public safety, disaster management, and other critical applications. We anticipate that this progressive step towards making India the global hub for drone technology and being Aatmanirbhar Bharat will enhance productivity and efficiency, while accelerating drone adoption across industries such as logistics and infrastructure,” Agnishwar Jayaprakash added.
The rate discrepancy not only created pricing distortions but also led to compliance hurdles and regulatory ambiguity for both manufacturers and buyers.
Amit Mahajan, Director – Technical and R&D, Paras Defence & Space Technologies commenting on the latest directive said, “With GST reforms reducing GST on drones and exempting Military Drones and drone components such as batteries is a clear indication that drones are being recognised as a platform of the future. Be it commercial applications or military, impact of drones on our lives is inevitable and the new reforms will boost the industry and encourage technology development in this space. The new reforms have entrusted faith in Drone Platforms to become a high-volume industry with enabled supply chain.”
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.
“Lowering GST on drones to 5% is not a giveaway—it’s a growth multiplier. It reduces upfront prices for farmers and service providers, shortens payback on agri-drone operations, and helps India hit its aggressive growth trajectory for UAV adoption- CAGR ~24% to 2030 with annual procurements rising from 8,400 units in 2025 to 16,800 by 2030,” Dr Preet Sandhu, Founder & Managing Director, AVPL International said on the latest decision.
At present, India has over 600 drone start-ups which have already raised more than $500 million in funding.
Sai Pattabiram, Founder of Zuppa Geo Navigation Technologies Pvt Ltd described the latest move as a positive one, leading to further expansion of the industry in India. He said, “The recent GST revision for the drone industry is a welcome step, building on Operation Sindoor’s efforts to indigenise drone component development and manufacturing, especially electronics related to control and communication. This move is a timely shot in the arm for local production and innovation.”
“Following this impetus by raising of customs duty on imported drone components, would further boost investments in domestic manufacturing and development. This would align with the government’s ‘Make in India’ initiative, promoting self-reliance and reducing dependence on imports, ultimately driving growth and competitiveness in the Indian drone industry,” Pattabiram added.
