If so, what potential issues would I face?
Yes, they can. The only potential issue I see is that if the drill boot is made of metal, you would need to use an on-metal tag, which has a spacer between the antenna and the surface of the boot. You will want to choose a tag that does not interfere with the drill’s operation.
—Mark Roberti, Founder and Editor, RFID Journal
What Chip Is Used in NFC Tags? »