In September 2025, India set a flat 5% GST on drones, down from the earlier 18–28%. Defence drones, simulators, and critical training equipment were made entirely tax free.

For the Indian drone industry, this policy change can bring a new revolution.

But how does India’s new 5% rate compare with the rest of the world? Are we now among the most competitive drone markets globally, or do tariffs and hidden costs still put us at a disadvantage?

Let’s take a closer look.

Why the Comparison Matters

Taxes shape affordability, adoption, and global competitiveness.

A drone priced at INR 1,00,000 carries very different costs depending on whether you’re paying 5% GST in India, 20% VAT in Europe, or 13% VAT in China.

Earlier, India was burdened by uneven slabs:

18% on commercial drones with cameras
28% on personal drones
5% on some non-camera drones

That unpredictability made pricing complicated. The new flat 5% GST puts India in a far cleaner and more competitive position.

Also read: GST cut on drones: What it means for Indian industry

Drone Tax Rates Across the World

Here’s how India’s 5 percent stacks up against key global markets:

European Union: VAT ranges from 17–27%, with most countries at 20–25%.
United Kingdom: Flat 20% VAT on drones.
United States: No federal VAT, but state sales taxes run between 0 and 11%. On top of that, Chinese drones face tariffs as high as 25%, raising costs sharply.
China: VAT at 13% on most electronic and manufactured goods, including drones.
Australia: Standard GST of 10%.
Canada: 5% GST federally, plus provincial sales taxes taking the total to 5–15 percent.
UAE: Flat 5% VAT, aligning directly with India.
Russia/EAEU: Some temporary zero VAT measures for drones made within the bloc.

India and the UAE now sit at the very bottom of the tax spectrum, while Europe, the UK, and Australia operate at double to five times higher rates.

What the Numbers Look Like

A real-world example shows the difference.

Professional drone, pre-tax price INR 1,00,000

Old India tax (18%): INR 18,000
New India tax (5%): INR 5,000
Savings: INR 13,000 (13% of price)

Personal drone, pre-tax price INR 1,00,000

Old India tax (28%): INR 28,000
New India tax (5%): INR 5,000
Savings: INR 23,000 (23% of price)

India vs Europe

EU VAT (20%): INR 20,000
India GST (5%): INR 5,000
Direct advantage: INR 15,000 (15% of price)

This difference is not marginal. It can define whether a drone is affordable for a farmer, or competitive in a global export tender.

Also read: Defense minister Rajnath Singh highlights India’s drone revolution

The Tariff Twist

Consumption taxes are not the only factor. Tariffs and trade policies play a big role too.

United States: Beyond sales tax, tariffs of 25% or more apply to Chinese drones. That raises costs and complicates sourcing.
India: Since 2022, imports of fully assembled drones have been banned, though components can still be brought in. This pushes local manufacturing but limits quick imports.
China: As the world’s biggest drone exporter, any shift in Chinese export policy or tariffs affects the global market.

Even with a low GST, India’s global competitiveness will partly depend on how well it can localise production and navigate foreign tariffs.

Sector-Wise Competitiveness

Agriculture: Lower GST means more farmers can afford crop-spraying and monitoring drones. With agriculture driving nearly 40% of demand by 2030, this is a major win.
Defence and Security: Exemptions on defence drones and simulators cut acquisition and training costs, giving India an edge in domestic defence adoption.
Infrastructure and Logistics: Cheaper mapping and surveying drones reduce project costs and risks, improving efficiency in construction and delivery.
Startups and MSMEs: Lower tax frees capital for R&D, allowing younger companies to innovate instead of just survive.

Also read : insideFPV presents future-ready drones to the Indian army

InsideFPV’s View: Leveraging the Advantage

At InsideFPV, we see India’s new 5% GST as more than a cost saving. It’s an opportunity to position India as a global drone hub. Our approach is focused on:

Affordable drone designs made for agriculture, surveillance, and infrastructure.
Local manufacturing to reduce reliance on imported components and tariffs.
Training expansion, using tax-free simulators to build a large pool of skilled pilots.
Rugged defence FPVs designed for India’s tactical environments.

By combining tax advantage with innovation and training, we can move beyond selling drones to creating a self-sustaining ecosystem.

India’s move to a flat 5% GST is more than a policy update, it is a global statement. Compared to the EU’s 20% VAT or Australia’s 10% GST, India now offers one of the lowest tax regimes in the world for drones.

But turning tax competitiveness into true global leadership will require local supply chains, smart export strategies, and an ecosystem that blends affordability with innovation.

Frequently Asked Questions

How does India’s drone tax compare to Europe’s?

India’s 5% GST is far below Europe’s 20–25% VAT, giving Indian drones a 15–20 percent cost edge.

Does this make drones cheaper within India?

Yes, drones are now 10–23% cheaper depending on the category compared to older tax rates.

What about the US market?

US state sales taxes are lower, but heavy tariffs and restrictions on imports make access challenging.

Which export markets look most promising for Indian drones?

The UAE, Africa, and Southeast Asia, where tax regimes are closer to India’s and import barriers are relatively low.