With effect from September 22, 2025, the Indian government has declared a large exemption from customs duties on 18 categories of goods linked to defense. The action, which was taken in accordance with the Customs Act of 1962 and the Customs Tariff Act of 1975, coincides with the GST Council’s September 3 ratification of a more comprehensive tax reform known as “GST 2.0.”
In addition to lowering consumer tax burdens through GST reforms, the exclusions are meant to lower the cost of purchasing cutting-edge defense technologies and align with a larger national agenda to modernize military power.
Critical high-value equipment like military transport planes, ship-launched missiles and rockets larger than 100 mm, deep submersion rescue boats, unmanned underwater vehicles, remotely piloted aircraft for military applications, and flight motion simulators and their components are all on the exemption list.
It also covers advanced support systems such as high-performance drone batteries, software-defined radios, sonobuoys for naval air operations, fighter aircraft ejection seats, and technical literature or paperwork essential to their handling and upkeep. These additions are intended to directly support frontline platforms in the land, sea, and air domains.
The notification’s broad application of duty exemptions to imported components, spares, subassemblies, testing apparatus, accessories, and tools for weapon systems such as artillery, rifles, missiles, and airplanes is one of its main features. This lowers platform maintenance lifecycle costs while guaranteeing complete supply-chain relief.
Nonetheless, certain exceptions have been preserved for systems that are currently in domestic production or long-term stock, including the AK-630 naval weapons, MAG guns, light machine guns, 155mm/45 Cal Dhanush artillery guns, 84mm RL MK-III, L-70 guns, and 12.7mm Stabilized Remote-Controlled Gun (SRCG). The strategy strikes a balance between protecting the domestic defense industrial base and providing fiscal relief by establishing such exceptions.
Strategically, the exemptions include specialized enablers of integrated warfare such as rebreather or air-diving sets required for navy special operations, low-noise amplifiers for missile integration, target motion simulators, and components of high-altitude communication systems.
India’s focus on enhancing its anti-submarine and undersea warfare capabilities is shown in the inclusion of sub-assemblies for integrated underwater defense platforms. Recognizing new areas like unmanned operations, electronic warfare, and C4ISR is demonstrated by the parallel focus on drone batteries and communication gear.
The Center hopes to improve operational preparedness, speed up modernization, and close important supply gaps at a lower tax cost by adding frontline platforms and their supporting subsystems to the waiver list.
The move’s timing in conjunction with the rationalization of the GST reveals a twin goal: lowering the cost of home products for civilians while guaranteeing that the military has equal access to cutting-edge technology free from financial constraints.
In addition to addressing defense readiness by lowering reliance on expensive imports, this unified tax approach guarantees a seamless transition between macroeconomic taxation and defense expenditures.
