New Delhi: The GST rationalisation, which lower rates across the renewable energy value chain from 12 per cent to 5 per cent, will make rooftop solar systems more affordable for households, bringing down the price of a typical 3 kilowatts (kW) rooftop system by about Rs 9,000–10,500, the Ministry of New and Renewable Energy said on Wednesday.
The move will make it easier for lakhs of families to adopt solar energy and accelerate large-scale uptake under the PM Surya Ghar: Muft Bijli Yojana. The government's move will also bring down the cost of clean energy projects, making electricity more affordable and directly benefiting households, farmers, industries, and developers.
"For instance, the capital cost of a utility-scale solar project, which typically amounts to around Rs 3.5–4 crore per MW, will now see savings of Rs 20–25 lakh per megawatt (MW)," the ministry stated. Similarly, at the scale of a 500 MW solar park, the project cost will reduce by over Rs 100 crore. The reduction in GST is expected to lower levelised renewable tariffs, easing the financial burden of electricity procurement for distribution companies (DISCOMs).
This could translate into nationwide annual savings of Rs 2,000–3,000 crore in power procurement costs. End consumers will benefit from greater access to affordable clean electricity, reinforcing the long-term sustainability of India’s power sector. Farmers under the PM-KUSUM scheme will also benefit significantly. A 5 HP solar pump, costing about Rs 2.5 lakh, will now be cheaper by nearly Rs 17,500.
At the scale of 10 lakh solar pumps, farmers collectively stand to save Rs 1,750 crore, making irrigation more affordable and sustainable. Lower GST will enhance the competitiveness of Indian-made renewable energy equipment by reducing module and component costs by 3-4 per cent, supporting the 'Make in India' and 'Aatmanirbhar Bharat' initiatives.
With India targeting 100 GW of solar manufacturing capacity by 2030, the reform will encourage fresh investment into domestic manufacturing hubs. "Considering that every GW of manufacturing creates about 5,000 jobs, the reform could support 5–7 lakh direct and indirect jobs over the next decade, strengthening India’s clean energy industrial ecosystem," the ministry said. The GST cut will not only reduce the levelised cost of energy but also boost investor confidence, enabling faster signing of power purchase agreements and quicker project commissioning.
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