Relief for defence startups as MoD agrees to fully reimburse 18% GST on R&D grants
BusinessLine 1 hr ago·5 Aug 2026, 2:40 pm
The Ministry of Defence has clarified that it will fully reimburse the 18% Goods and Services Tax (GST) charged on Research and Development (R&D) grants. This decision directly impacts defence startups and innovators who were previously uncertain about recovering these indirect taxes on government funding.
This move is significant as it reduces the financial burden on defence innovators, allowing them to allocate more resources towards indigenous product development and military technology. By removing this uncertainty, the government aims to strengthen the startup ecosystem and encourage further innovation in the sector.
Investors should monitor how this policy clarity boosts the operational efficiency of defence startups. A more stable regulatory environment often leads to better execution of projects and improved long-term growth prospects for the sector.
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