How Much Will GST Cuts on Renewable Energy Save by 2030?
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Synopsis
Discover how the recent reduction in GST on renewable energy could save India up to Rs 1.5 trillion by 2030. Union Minister Pralhad Joshi outlines the transformative impact on the renewable sector, paving the way for a sustainable energy future.
Key Takeaways
- GST Reduction: GST on renewable energy reduced from 12% to 5%.
- Financial Savings: Expected savings of Rs 1–1.5 trillion by 2030.
- Capacity Goals: Aim for 500 GW of installed renewable energy.
- Cost Efficiency: Significant reduction in solar project costs.
- Manufacturing Initiatives: Focus on boosting domestic solar manufacturing.
New Delhi, Sep 23 (NationPress) The reduction of Goods and Services Tax (GST) on the renewable energy value chain from 12 percent to 5 percent is projected to save up to Rs 1–1.5 trillion by 2030, according to the Union Minister for New and Renewable Energy, Pralhad Joshi.
The savings are crucial for achieving the nation's target of 500 gigawatts (GW) of installed renewable energy (RE) capacity by 2030, as stated by Joshi at a recent media event.
India has already achieved 252 GW of this goal, with an additional 248 GW expected to be installed in the next five years.
"This GST cut will lead to savings of approximately Rs 1 to 1.5 trillion. This will be the biggest advantage," the minister remarked.
The Ministry of New and Renewable Energy (MNRE) anticipates that this tax reduction will lower project costs and enhance consumer access to clean electricity.
The capital cost of a utility-scale solar project, previously around Rs 3.5–4 crore per MW, will now see a reduction of Rs 20–25 lakh per MW. This translates into savings exceeding Rs 100 crore for a 500 MW solar park, thereby improving tariff competitiveness.
A 3 kW rooftop solar system is expected to cost between Rs 9,000 and Rs 10,500 per household, encouraging adoption through the government's PM Surya Ghar: Muft Bijli Yojana.
The Centre is also developing a comprehensive plan to establish a self-sufficient solar manufacturing ecosystem, covering polysilicon, wafers, and ingots.
Joshi has recommended utilizing initiatives like Production Linked Incentive (PLI) and Viability Gap Funding (VGF) to boost domestic manufacturing.
In addition to modules and cells, the MNRE is working to include wafers and ingots in the Approved List of Models and Manufacturers (ALMM).
According to a draft amendment, ALMM List III for wafers will be implemented starting in June 2028, contingent upon establishing at least three distinct manufacturing facilities with a combined 15 GW capacity.
Point of View
The reduction in GST on renewable energy is a pivotal move for India's energy landscape. It not only aligns with the nation's sustainability goals but also emphasizes the government's commitment to fostering a robust renewable sector. The potential savings can significantly enhance energy accessibility for the common man, ensuring a cleaner and greener future.
NationPress
23/09/2025
Frequently Asked Questions
What is the current GST rate on renewable energy?
The current GST rate on renewable energy has been reduced from 12 percent to 5 percent.
How much money is expected to be saved by 2030?
The reduction in GST is projected to save India up to Rs 1–1.5 trillion by 2030.
What is the target for installed renewable energy capacity by 2030?
The target for installed renewable energy capacity by 2030 is 500 gigawatts (GW).
What impact will the GST cut have on solar project costs?
The GST cut will lower the capital cost of utility-scale solar projects significantly, improving tariff competitiveness.
What initiatives are in place to boost solar manufacturing?
The government is implementing initiatives like the Production Linked Incentive (PLI) and Viability Gap Funding (VGF) to promote domestic solar manufacturing.
