GST relief comes as defence imports tilt towards missiles, artillery

Defence items to be cheaper with GST reduction

The decision to scrap 18 percent integrated GST (IGST) on critical defence hardware such as missiles, artillery systems, transport aircraft and drones comes at a time when India's armament import profile seems to be tilting towards heavier weaponry.

A Moneycontrol analysis has shown that India is spending less on fighter jets and more on missiles and heavy weaponry than it did a decade ago.

Missiles Climb the Ladder

Missiles have seen the sharpest increase within India’s defence import basket. Between 2007-2012, they made up just 6.3 percent of all imports, but this share more than tripled to 21 percent in 2019–2024, with absolute imports rising threefold. Artillery imports, while starting from a low base, jumped nearly tenfold in the same period, pushing their share up to 3.6 percent from just 0.3 percent earlier.

Ships, armoured vehicles and naval weapons have either stagnated or declined, signalling both growing self-reliance and shifting priorities. Air defence systems, by contrast, have grown steadily—from 1.7 percent to 5.1 percent of imports—as India invests in layered missile defence. Engines and sensors have held relatively stable shares.

The GST Council’s decision to exempt IGST on missiles, rockets, UAVs, and parts for naval and aerial systems is closely aligned with this evolving profile. The reforms also cover communication devices, sonobuoys, ejection seats and high-performance drone batteries. By easing acquisition costs and speeding procurement, the tax relief is expected to bolster India’s expanding defence capex.