India’s Renewable Sector Cheers GST Reform As Costs Drop And Adoption Rises

The recent decision to reduce the Goods and Services Tax (GST) on renewable energy equipment has been welcomed as a transformative step for the clean energy sector. The reduction of GST rates on solar products, wind turbine components, and energy storage solutions from 12% to 5% is expected to bring down the overall cost of renewable projects. This move will help lower the cost of electricity generation and make clean energy more affordable for households, businesses, and large-scale projects alike.

Industry experts believe the reform will reduce the capital cost of solar and wind projects by nearly 5%, translating into lower tariffs by around 10 to 17 paise per unit. Such reductions not only improve project viability but also directly benefit distribution companies, which can now procure power at more competitive rates. The measure is seen as a catalyst for India’s renewable energy goals, particularly the target of achieving 500 GW of clean energy capacity by 2030.

The decision also sends a strong signal in support of domestic manufacturing. Lower taxes on solar cells, modules, and other components will encourage new investments and strengthen the supply chain within the country. It is expected to support initiatives under the “Make in India” mission, giving a boost to self-reliance while also making solar installations more accessible across rural and urban areas. Additionally, the tax cut on non-lithium battery technologies is being viewed as crucial for the growth of long-duration storage solutions that are vital for grid stability and round-the-clock renewable power supply.

Another key aspect of the GST rationalization is its impact on consumers. Households adopting rooftop solar will now face lower upfront costs, making clean energy more attractive at the residential level. At the same time, the tax reduction is likely to spur wider adoption of solar in agriculture and small businesses, offering a cost-effective alternative to conventional energy sources. The reforms also merge the earlier compensation cess on coal into a higher GST rate, a move that will not significantly affect thermal costs but will create a level playing field for renewable energy to scale faster.

Overall, the GST cut is being seen as a landmark step that simplifies taxation, reduces financial barriers, and accelerates the transition toward a low-carbon economy. By making renewable energy projects more competitive and affordable, the reform strengthens India’s ambition of becoming a global leader in sustainable growth while ensuring energy security for the future.

Sumant Sinha, Founder & CEO, ReNew

“We commend the GST Council for its reforms that lower GST on solar equipment and batteries to 5%, reducing electricity costs and boosting competitiveness. Merging coal cess into 18% GST will cut thermal costs. Broader rationalisation will spur consumption and exports, marking a step toward a more efficient, resilient, and inclusive economy.”

Sameer Gupta, Chairman, Jakson Group

“Reducing GST on renewable equipment from 12% to 5% lowers project input costs and boosts affordability for households, businesses, and farmers. It strengthens renewable viability, supports domestic manufacturing, and creates a competitive ‘Made in India’ solar supply chain, reinforcing India’s global green energy leadership.”

Ratul Puri, Chairman, Hindustan Power

“We welcome the GST Council’s decision, which eases operations and strengthens India’s clean energy shift. Though coal GST rose to 18%, cess removal offsets the impact. Cutting renewable GST to 5% is transformative, enhancing capacity and accelerating adoption of biogas, solar, hydrogen, and storage. This reaffirms commitment to a future-ready power ecosystem.”

Rajiv Ranjan Mishra, MD, Apraava Energy

“Reducing GST on renewable equipment from 12% to 5% is a catalyst for India’s energy transition. It boosts domestic manufacturing, lowers project costs, and strengthens tariff competitiveness, making clean energy attractive for investors and consumers. The reform accelerates renewable goals and supports a resilient, sustainable power ecosystem.”

Gautam Mohanka, Director, Gautam Solar

“Reducing GST on solar components to 5% is pivotal for India’s clean-energy transition. It makes solar more accessible for households, businesses, and farmers, while cutting carbon emissions. This reform boosts energy security, project pipelines, and contributes to India’s climate commitments.”

Gyanesh Chaudhary, CMD, Vikram Solar

“The GST cut on solar components to 5% lowers project costs and accelerates adoption across sectors. It supports Atmanirbhar Bharat by encouraging investment in domestic solar manufacturing. Cutting tax on non-lithium batteries also aids grid stability, strengthening India’s clean energy value chain.”

Preeti Bajaj, MD & CEO, Luminous Power Technologies

“The GST cut on renewable devices to 5% and on non-lithium batteries to 18% makes clean energy and storage more affordable. It will boost solar adoption, grid stability, and long-duration storage, while creating jobs and stimulating allied industries—laying a strong foundation for a future-ready India.”

Girishkumar Kadam, SVP & Group Head, ICRA Ltd.

“The GST rationalisation for solar and wind reduces project capital costs by ~5%, cutting generation costs by 10–17 paise per unit. This benefits under-implementation projects, future bids, and lowers discoms’ power purchase costs.”

Hiten Parekh, President – Global Sales, GREW Solar

“The GST cut on renewable components lowers costs, easing barriers for developers and boosting accessibility. It strengthens India’s solar manufacturing ecosystem, spurs domestic demand, and creates employment. This reform accelerates job creation, energy independence, and climate-positive growth.”

Vipin Tiwari, Corporate Strategy Manager, AXITEC Energy India Pvt. Ltd.

“Cutting GST on solar products from 12% to 5% makes clean energy affordable, especially for households outside GST. It eases financial burdens, supports PM Surya Ghar Yojana, and accelerates solar adoption—pushing India toward sustainability goals.”

Rohit Chandra, Co-Founder & CEO, OMC Power

“We thank the GST Council for rationalising GST into a two-rate structure. It eases compliance, lowers costs, and boosts affordability across rural and urban markets. For renewable firms, this predictable tax regime enables long-term rural investments, supporting inclusive growth and sustainable energy access.”

Dhaval Popat, Energy Analyst, Choice Institutional Equities

“Reducing GST on solar cells, biogas plants, wind systems, and hydrogen-fuel vehicles from 12% to 5% improves project viability and competitiveness. Renewable firms will benefit meaningfully, though Indian PV players still face U.S. import tariffs of 50%.”

Amit Jain, CEO & Country Manager India, ENGIE

“The GST Council’s decision to cut GST on renewable equipment to 5% is a vital step for India’s clean energy goals. ENGIE India, with 2.3 GW capacity, fully supports this move, which strengthens liquidity, fast-tracks projects, and attracts investments. It will boost competitiveness, reinforce India’s leadership in renewables, and accelerate the path to a carbon-neutral future.”

Divya Prakash Choraria, CEO & Co-founder, WattPower

“The GST cut from 12% to 5% on renewable equipment is a much-needed boost. It lowers project costs, improves affordability, and accelerates India’s clean energy transition. This decision shows the government’s commitment to mainstreaming renewables, and we believe it will unlock new momentum for solar adoption across the country.”

Shreya Mishra, Co-Founder & CEO, SolarSquare

“The GST reduction on solar modules from 12% to 5% is a big win for homeowners. It makes rooftop solar more affordable, shortens payback periods, and boosts family savings. This progressive step should accelerate adoption, especially among middle-income households, leading to stronger rooftop solar demand and higher installations over the next 6–12 months.”

Ashish Suman, Partner, JSA Advocates & Solicitors

“The GST council’s rate cut on renewable devices, from 12% to 5%, makes production and supply more cost-effective. This move supports India’s decarbonisation goals and will drive investment and manufacturing in renewables. In the medium term, it strengthens India’s renewable energy ambitions and boosts next-generation clean technology adoption.”