GST Reforms to Unlock ₹1.5 Lakh Crore Boost for Renewables

India’s renewable energy sector is set to gain up to ₹1.5 lakh crore in savings following the government’s recent Goods and Services Tax (GST) reforms, Union Minister Pralhad Joshi said at the 6th CII International Energy Conference and Exhibition in New Delhi. The GST on solar, wind, electrolysers, hydrogen equipment, and related devices has been reduced from 12% to 5%, easing capital costs for the industry.

Joshi highlighted that the reforms, announced by Prime Minister Narendra Modi during his Independence Day speech and implemented from September 22, also slashed GST on biodegradable bags from 18% to 5%, encouraging faster adoption of eco-friendly alternatives. He called this move a significant “gift” to the renewable sector and the country’s energy transition.

The minister further stressed the government’s commitment to addressing key challenges such as storage, power purchase agreements, and regulatory hurdles. He pointed to initiatives like the installation of 10 million rooftop solar units as proof of India’s scale and ambition, adding that the country has already achieved more than 50% of its installed power capacity from non-fossil fuel sources.

Looking ahead, Joshi said India is well on track to reach its 500 GW renewable energy target by 2030 and is also working on policies to boost domestic silicon manufacturing. Industry leaders at the event echoed the sentiment, underlining that energy security, self-reliance, and sustainability are now essential imperatives for India’s growth.

The GST cut is one of the more meaningful policy interventions for Indian renewable economics in recent memory - it materially improves project IRRs across solar, wind, storage and electrolyser categories almost overnight. Our energy-transition and responsible-investment teams help developers, IPPs and financiers rework pipeline sequencing in light of the improved economics, particularly on the 500 GW-by-2030 pathway.