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GST Cut to Boost Renewable Energy Growth and Manufacturing in India

Union Minister for New and Renewable Energy, Pralhad Joshi, announced that reducing Goods and Services Tax (GST) on the renewable energy value chain from 12% to 5% will save the sector between Rs1–1.5 trillion by 2030. This move is expected to lower project costs, make electricity more affordable, and accelerate India’s renewable energy target of 500 GW capacity by 2030, of which 252 GW has already been achieved.

The cost of utility-scale solar projects, typically around Rs3.5–4 crore per MW, will now fall by Rs20–25 lakh per MW. For example, a 500 MW solar park could save over Rs100 crore, making tariffs more competitive. At the household level, rooftop solar will also become cheaper, with a typical 3 kW system costing Rs9,000–10,500 less. This will further push adoption under schemes like PM Surya Ghar: Muft Bijli Yojana.

Beyond GST rationalisation, the government is also focusing on building a fully indigenous solar value chain. Plans are underway for domestic manufacturing of wafers, ingots, and polysilicon, supported through schemes like Production Linked Incentive (PLI) and Viability Gap Funding (VGF). The ministry also plans an Approved List of Models and Manufacturers (ALMM) for wafers by June 2028, once sufficient local capacity is established.