GST on Renewable Energy Devices Rationalised to 5% to Accelerate India’s Clean Energy Transition
SDG 7: Affordable and Clean Energy | SDG 13: Climate Action
Institutions: Ministry of New & Renewable Energy
The Government of India has reduced the Goods and Services Tax (GST) on renewable energy devices from 12% to 5%, effective 22nd September 2025. This cut is designed to lower costs for households, farmers, industries, and developers, while also advancing national missions like Make in India and Aatmanirbhar Bharat by strengthening domestic manufacturing.
Households adopting rooftop solar will save ₹9,000–10,500 on a 3 kW system, while farmers will collectively benefit by ₹1,750 crore through cheaper solar pumps under the PM-KUSUM scheme. For utility-scale projects, the reduction of ₹20–25 lakh per MW translates to over ₹100 crore savings in a 500 MW solar park, while DISCOMs are projected to save ₹2,000–3,000 crore annually in procurement costs.
Crucially, the reform is expected to create 5–7 lakh jobs over the next decade, boost investor confidence, and accelerate commissioning timelines. By lowering the levelized cost of energy, it situates India’s GST policy squarely within its long-term clean energy roadmap, supporting the Paris Agreement goals and the target of 500 GW of non-fossil fuel capacity by 2030.
This fiscal reform demonstrates how tax policy can be aligned with industrial strategy, employment generation, and climate commitments. By linking immediate cost relief with Make in India, Aatmanirbhar Bharat, and global sustainability goals, it integrates short-term incentives with long-term energy transition planning.
Relevant Question for Policy Stakeholders:
How can central and state institutions ensure that the GST reform delivers not only cheaper renewables but also sustained job creation, stronger domestic manufacturing, and measurable progress toward India’s 2030 and Paris Agreement targets?
Follow the full news here: https://www.pib.gov.in/PressReleasePage.aspx?PRID=2167486