GST reduction to boost investment, lower costs for rooftop solar and farmers, and accelerate India’s renewable energy targets

The recent reduction in Goods and Services Tax (GST) on renewable energy equipment is expected to save investors up to Rs 1.5 lakh crore by 2030, Union Minister for New and Renewable Energy Pralhad Joshi said on Monday.

Speaking on the sidelines of the CII 6th International Energy Conference, Joshi noted that the GST on renewable equipment has been cut from 18 per cent to 5 per cent, coinciding with the first day of Navratri. “This measure will provide significant relief to investors and further incentivise India’s clean energy transition,” he said.

The reduction is projected to support India’s target of achieving 500 GW of renewable energy capacity by 2030. According to the Ministry of New and Renewable Energy, even a modest 2-3 per cent cost reduction could unlock Rs 1-1.5 lakh crore in additional investment capacity, as the country plans to add around 300 GW of renewable energy in the coming years.

The GST cut is also expected to make rooftop solar systems under the PM Surya Ghar: Muft Bijli Yojana more affordable, reducing the cost of a 3 kW system by Rs 9,000–10,500. Farmers under the PM-Kusum scheme are anticipated to save Rs 1,750 crore on 10 lakh solar pumps.

Joshi highlighted progress in India’s clean energy journey, noting that over 50 per cent of the country’s installed power capacity now comes from non-fossil fuel sources, surpassing the 252 GW milestone halfway to the 500 GW target five years ahead of schedule. Recent clean energy auctions have also recorded India’s lowest-ever solar power price with battery storage, at Rs 2.70 per unit in Madhya Pradesh.