GST Reforms to Boost India’s Drone Ecosystem

Syllabus: GS3/ Economy, Defence

Context

• The slash in GST for drones by fixing it at a uniform 5 percent in the 56th GST Council meet is set to boost the country’s rapidly growing drone ecosystem.
  • Earlier, the rates were 18 per cent for drones with integrated cameras and 28 per cent for drones classified for personal use. 

Drone Ecosystem

• According to industry estimates, the global drone market is valued at over $30 billion in 2025 and is projected to reach $90–100 billion by 2030, driven by rapid adoption of AI, automation, and 5G integration.
• India is incentivising indigenous drone and counter-drone technologies with USD 230 million support packages, to reduce import dependence and enhance procurement efficiency.

Leading Countries and their strengths

• China: China dominates the global market, with DJI controlling nearly 70% of the civilian drone segment. Strong state support has expanded applications in precision farming, urban air mobility, and logistics.
• United States: The U.S. military is investing heavily in unmanned combat aerial vehicles (UCAVs) and loitering munitions.
  • E-commerce drivers: Firms like Amazon Prime Air are testing large-scale drone delivery networks for parcels.
• Turkey has emerged as a global leader in armed drones, with Baykar’s Bayraktar TB2 and TB3 being exported to over 30 countries.
• The EU’s supportive framework on Beyond Visual Line of Sight (BVLOS) operations is enabling drones in energy, inspection, and logistics.

Opportunities in Drone Industry

• Boost Global Competitiveness: By leveraging its large domestic market and start-up base, India can position itself as a global hub for affordable drone technologies, similar to its role in IT services.
• Industrial Applications: Drones are being deployed for mapping, mining inspections, pipeline monitoring, and smart city projects, cutting both time and costs.
  • The Aerostatic Drone is developed for persistent surveillance and disaster management.
• Healthcare Services: Pilot projects in states like Telangana and Meghalaya have demonstrated successful last-mile drone deliveries of medicines and vaccines.
• Logistics: Drone delivery networks can reduce urban congestion and bring down last-mile delivery costs by up to 40%.

Government Initiatives in Drone Sector

• Drones Rules, 2021 provide the necessary regulatory framework for commercial use of drones.
  • These rules cover various aspects like type certification, registration and operation of drones, airspace restrictions, research, development and testing of drones, training and licensing, offences and penalties etc.
• Drone Airspace Map published in 2021, has opened nearly 90% of Indian airspace as a green zone for drones flying up to 400 feet.
• Production-Linked Incentive (PLI) scheme provides for an incentive of Rs 120 crores, spread over three financial years. The PLI rate is 20% of the value addition over three financial years. 
• Drone certification scheme 2022, making it easier to obtain type certificates by drone manufacturers.
• Drone import policy 2022, banning import of foreign drones and freeing up import of drone components.
• Drone (Amendment) Rules, 2022 abolished the requirement of a drone pilot license.

Challenges to the Drone Industry

• Import Dependence: Despite policy support, India continues to depend heavily on imported drone components such as motors, sensors, and batteries, with China dominating the global supply chain.
• Regulatory and Compliance Issues: While the Drone Rules, 2021, simplified licensing, compliance processes for type certification, and safety approvals remain time-consuming, creating hurdles for start-ups.
• Security Concerns: Drone incursions along the border areas highlight the risk of misuse by non-state actors. Civilian drones without proper regulation pose risks of smuggling, spying, and sabotage.
• Affordability Gaps: Farmers and small businesses lack awareness of drone benefits. Even with subsidies, the upfront cost of agricultural drones remains high for small landholders.

Way Ahead

• Investments can be directed towards local manufacturing of critical components such as batteries, motors, and sensors to reduce import dependence.
• Advanced detection and neutralisation systems could be deployed at sensitive installations and borders to mitigate security risks.
• Green Transition: Adoption of eco-friendly propulsion systems like hydrogen and solar is essential for sustainability.

Source: AIR