The Ministry of New and Renewable Energy (MNRE) announced that reducing the GST on renewable energy equipment from 12% to 5% will significantly lower capital costs for projects and improve tariff competitiveness. For a utility-scale solar project, typically costing ₹3.5–4 crore per MW, this translates to savings of ₹20–25 lakh per MW, or over ₹100 crore for a 500 MW solar park.
The reduction is expected to make rooftop solar systems cheaper by around ₹9,000–10,500 for a typical 3 kW system, boosting adoption under the PM Surya Ghar: Muft Bijli Yojana. Farmers will also benefit, with 5 HP solar pumps becoming approximately ₹17,500 less expensive, potentially saving ₹1,750 crore for 10 lakh solar pumps under the PM-KUSUM scheme.
The GST cut is anticipated to reduce renewable tariffs, easing the financial stress on distribution companies (discoms) and generating annual power procurement savings of ₹2,000–3,000 crore nationwide. It will support the government’s Make in India and Atmanirbhar Bharat initiatives by making domestic manufacturing more competitive, potentially creating 5–7 lakh green jobs as India aims for 100 GW of solar manufacturing capacity by 2030.
Additionally, faster deployment enabled by the GST cut could help avoid 50–70 million tonnes of CO₂ emissions annually by 2030, aligning with India’s climate commitments.
