Military hardware set to be cheaper as 18% IGST scrapped

FRom remote-controlled systems to riddance seats for attack aircraft jets and send aircraft to rockets, a astray variety of military hardware is set to get cheaper as a result of the next-generation goods and services tax reforms being implemented by the Narendra Modi government.The integrated goods and services tax (IGST) on military hardware has been cut from 18% to nil in the case of military equipment, including ship-launched missiles, deep submergence rescue vessels, flight motion simulators, integrated air defence weapon system, unmanned underwater vessels, and communication devices, said a finance ministry statement on the recommendations of the 56th meeting of the GST Council held on Wednesday.IGST is levied on interstate transfer of goods and services and it is shared between the Centre and the state. All imports are treated as interstate supplies and accordingly IGST is levied on them in addition to the applicable custom duties.The GST rationalisation is a welcome step and will significantly boost India’s UAV (unmanned aerial vehicle) 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, said ideaForge CEO Ankit Mehta.“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,” he said.The other items for which the IGST has been removed include sonobuoys for naval air assets, rockets with calibre more than 100mm and high performance batteries for drones and specialised equipment. In addition, parts, sub-assemblies, spares, accessories, tools and testing equipment for artillery weapons, rifles, aircraft, rocket launchers, AK-630 naval guns and light machine guns have also been exempted from IGST.The development comes at a time the Indian military is modernising its capabilities at a swift pace to address emerging challenges. It also comes four months after India launched Operation Sindoor in the early hours of May 7 and struck terror and military installations in Pakistan and Pakistan-occupied Kashmir (PoK) following the April 22 Pahalgam terror strike in which 26 people were killed. Between the launch of the operation and the ceasefire on May 10 evening, Indian forces bombed nine terror camps in Pakistan and PoK, killing at least 100 terrorists, and struck targets at 13 Pakistani airbases and military installations.Days after the ceasefire, the government granted powers to the armed forces to make emergency purchases worth around ₹40,000 crore.