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GST Cut on Solar Cells Set to Reduce Costs and Boost Adoption

The GST Council is expected to reduce the tax rate on renewable energy products such as solar photovoltaic cells, cookers, and power generators from 12% to 5%. This move could significantly lower costs for developers, manufacturers, and consumers, while also encouraging faster adoption of clean energy technologies.

Currently, solar cell imports face 25–40% duties, which makes domestic products less competitive. Lower GST would make Indian-manufactured solar cells more attractive, encouraging new production units and reducing dependence on imports. Industry experts estimate the cut could lower the cost of solar power by 10–15%, making it more affordable and improving the economics of green hydrogen as well.

According to Greenzo Energy’s Sandeep Agarwal, cheaper solar cookers and generators will accelerate consumer adoption. Gautam Solar’s Gautam Mohanka noted that the tax break will expand accessibility for households, businesses, and farmers while strengthening India’s energy security and climate commitments.

Consultants estimate an 8 percentage point GST cut could reduce utility-scale project costs by Rs30–35 lakh per MW, translating into a 10 paise per unit drop in tariffs. However, as solar makes up only 10% of utilities’ energy mix, end consumers may see only a marginal 1–2 paise per unit benefit.