New GST rates set to accelerate power sector growth

Industry experts share their opinion commending the government’s decision.

In line with Prime Minister Narendra Modi’s vision of making GST a truly “Good and Simple Tax” that empowers every sector of the economy, the renewable and power sector received a major boost under the latest GST reforms approved by the Goods and Services Tax (GST) Council in its 56th meeting held on 3rd September 2025. The tax rate on renewable energy devices and parts will be cut from 12 percent to 5 percent from September 22, 2025.

The 5 percent relaxation in GST applies to solar power devices, solar power generators, windmills, wind-operated electricity generators (WOEG), solar cookers, biogas plants, waste-to-energy plants and devices, solar lanterns or solar lamps, tidal wave energy devices or plants, and solar photovoltaic (PV) cells, whether assembled in modules or not.

The relaxation in taxes will help in reduction of operational costs, enhance competitiveness in domestic and export markets. This is going to make renewable power attractive and also increase the number of projects.

Industry experts share their views on the latest GST curb.

Preeti Bajaj, MD & CEO, Luminous Power Technologies, says, “This is a powerful move that will not only boost demand and accelerate the adoption of solar energy but also strengthen grid stability and long-duration storage for renewable power. We welcome this landmark reform, which aligns with our vision of fulfilling every Indian consumer’s evolving energy needs with smart, sustainable and accessible energy solutions. These measures will also stimulate growth across allied renewable energy industries by job creation, thereby laying a strong foundation for a future-ready India.”

Dr. Amit Paithankar, CEO & Whole-time Director, Waaree Energies Limited, comments, “The recent GST rationalisation reflects the government’s commitment to India’s clean energy transition. The reduction of GST on renewable energy devices and equipment to a uniform 5 percent will lower project costs and accelerate the capacity addition needed to meet India’s clean energy targets. It also sends a strong signal to investors, improving the financial viability and attractiveness of the renewable energy sector. Moreover, this development will directly help reduce the overall cost of solar modules. Waaree is committed to passing on these benefits to customers, which will make our products more competitive in the market.”

Siddharth Bhatia, MD, Oyster Renewable Energy Pvt. Ltd, shares, “As a hybrid IPP player committed to accelerating the adoption of renewable power, this move significantly lowers the input costs for project development and module manufacturing, thereby enhancing the overall economics of renewable energy projects. This tax rationalisation is particularly timely as it coincides with India’s ambitious targets for domestic manufacturing self-reliance under the Atmanirbhar Bharat initiative and the ongoing efforts to scale up green hydrogen mobility solutions. Lower GST rates will most definitely stimulate project pipeline growth by making renewable power generation more cost-competitive, thereby fostering stronger demand from distribution companies and corporate buyers alike.”

Rajeev Kashyap, SVP and General Manager for India, Middle East, and Africa from Nextracker, notes, “The recent revision in GST is a progressive step for the sector. By easing the tax burden on critical components, the government has reinforced its commitment to accelerating India’s clean energy transition. This reform will benefit developers, power producers, and consumers alike by lowering project costs, enhancing viability, and enabling faster adoption across industries and utilities… At Nextracker, we are deeply aligned with the Make in India vision, and this policy change further empowers us to scale local manufacturing of solar trackers while contributing to the nation’s clean energy goals.”

Akshay Hiranandani, CEO, Serentica Renewables, expresses, “The reduction of GST on renewable energy equipment from 12 to 5 percent will significantly improve project cost efficiency, enabling faster deployment of clean power. Lower capital costs will translate into more competitive tariffs in auctions, supporting quicker capacity addition and passing direct benefits to consumers.”

Simarpreet Singh, Executive Director and CEO, Hartek Group, highlights, “The recent GST 2.0 reforms reducing the tax rate on renewable energy equipment to 5 percent mark a decisive step towards accelerating India’s clean energy transition. For the renewable sector, this move will substantially cut project costs, making installations more viable and attractive for developers and consumers. By easing the financial burden on capital-intensive projects, GST rationalisation will improve returns, encourage private participation, and accelerate nationwide adoption… Hartek Group, one of India’s top three solar EPC companies, views this as a strong enabler of renewable growth and will contribute through efficient project execution and advanced grid integration.”

Naresh Kumar, COO, Lauritz Knudsen, says, “Lauritz Knudsen welcomes the GST Council’s forward-thinking decision to rationalise tax slabs, reiterating the Centre’s sincere commitment towards the country’s overall transition to green energy. The GST reduction from 12 to 5 percent on renewable energy equipment and agricultural machinery lowers upfront costs. This will make green technologies more easily available and accessible across India. Tax rationalisation will also facilitate faster adoption of renewable solutions by the energy and agriculture segments… We expect these reforms to catalyse extra investments and fast-forward India’s progress towards renewable energy capacity targets for 2030.”

Ratul Puri, Chairman, Hindustan Power, highlights, “We welcome the GST Council’s progressive decision, which brings greater clarity and efficiency to the power sector. As an integrated energy company with a strong presence in both transitional and renewable energy generation, we believe this step will not only ease operations across the value chain but also strengthen India’s transition towards sustainable energy.”

“While the tax rate on coal has been raised from 5 to 18 percent, the overall impact will be minor as the existing compensation cess of ₹400 per tonne has now been subsumed within the GST rate… Keen to achieve a 5 GW energy portfolio within three years, Hindustan Power is driving large solar deployments, battery storage systems and reliable thermal infrastructure.”

Dhruv Sharma, CEO, Jupiter International Limited, opines, “This move not only brings down the cost of solar and clean energy solutions but also energises the entire ecosystem—manufacturers, developers, and end users alike. It will also help in India’s clean energy momentum and make sustainable solutions more accessible to millions.”

Laxit Awla, Director & CEO (Power Business), SAEL Industries Limited, shares, “This measure is expected to substantially lower production costs and improve the commercial viability of renewable projects, thereby promoting greater adoption and market expansion across the sector. The government’s continued focus on promoting domestic manufacturing and nurturing a robust renewable energy ecosystem is evident through such measures.”

“For the renewable energy sector, this revision is expected to bring down costs across the value chain, making technologies more accessible and affordable for both consumers and businesses. This will further catalyse faster adoption, attract new investments, job creation, and significantly boost India’s renewable energy capacity. We thank the government and welcome this policy change that will go a long way in this journey of energy transition for the nation.”

Vipin Tiwari, Corporate Strategy Manager, AXITEC Energy India Pvt. Ltd, shares,“The Indian government’s decision to cut GST on solar products from 12% to 5% is a welcome move to make clean energy more affordable, particularly for domestic consumers not registered under GST. This reduction eases the financial burden on households, supports the PM Surya Ghar Yojana, and is expected to accelerate solar adoption. The renewable energy sector has widely welcomed this step as a strong push toward India’s sustainability goals.”

Hiten Parekh, President – Global Sales, GREW Solar expresses, “Reducing GST rates on renewable energy components by the GST Council is a transformative step for the sector. By lowering the cost of solar parts, it eases barriers for both established developers and emerging players. More importantly, it makes clean energy more accessible while strengthening India’s solar manufacturing ecosystem by channelling demand into domestic supply chains and creating new avenues for employment across the value chain.

At GREW Solar, we are fully aligned with this future-first vision. Our precision-engineered manufacturing and sustainability-led approach ensure that India’s energy transition is not only affordable and self-reliant but also climate-positive. This move will accelerate job creation, fuel energy independence, and drive long-term sustainable growth for the country.”