New Delhi: In a landmark reform, the government has abolished Goods and Services Tax (GST) on a wide range of weapons, military aircraft, and defence equipment, while drastically reducing GST on drones from 28% to just 5%. The move is expected to provide a major push to India’s defence manufacturing ecosystem.

Chief of the Army Staff, General Upendra Dwivedi, welcomed the decision, stating that the reforms will significantly strengthen India’s defence corridors by attracting greater investments and delivering better outcomes. He added that Micro, Small and Medium Enterprises (MSMEs) and defence startups, which often face financial constraints, will now find it easier to invest in research, development, and manufacturing of advanced military technologies.

Under the GST 2.0 regime, several items earlier taxed at 18% are now exempt. These include military transport aircraft such as the U.S.-made C-130 and the C-295 medium transport aircraft jointly manufactured by Airbus and Tata in Vadodara. GST has also been eliminated on missiles launched from Remote Pilot Aircraft (RPAs), GSAT systems, ship-launched missiles, flight motion simulators, underwater vessels, and fighter jet ejection seats—critical safety components for pilots during emergencies.

The reforms are being hailed as a game-changer that will strengthen India’s defence capabilities and accelerate indigenisation in line with the country’s ‘Make in India’ and ‘Atmanirbhar Bharat’ vision.