India’s renewable energy sector received a major boost as the GST Council reduced tax rates on solar cells, modules, and wind turbine generators from 12% to 5%, effective September 22, 2025. The move is expected to cut project capital costs by around 5%, making clean energy more affordable and attractive for developers and consumers.
Experts estimate that this reform could lower tariffs by 10 paise per unit for solar projects and up to 17 paise per unit for wind projects, significantly reducing electricity costs. Developers who are yet to procure equipment will benefit directly, while those who have already purchased may need to explore contract revisions.
Industry stakeholders believe this step will revive stalled projects, spur new investments, and strengthen India’s domestic manufacturing ecosystem. By aligning taxes with the “polluter pays” principle, the government is signaling a strong push for 500 GW of non-fossil fuel capacity by 2030, making renewable energy more competitive against fossil fuels.
The reduction not only benefits developers but also supports India’s long-term vision of energy independence and decarbonization, reinforcing the country’s position as a global clean energy leader.
Resource: The Economic Times
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