The Indian government has moved to slash the goods and services tax (GST) on renewable energy equipment, bringing the rate down from 12 per cent to 5 per cent from 22 September 2025. This decision is meant to speed up the country’s energy transition, ease the strain on consumers and developers, and create new jobs in the coming years.
The solar sector shows the impact most clearly. Building one megawatt of utility-scale solar currently costs between INR 35 million (USD 398,493) and INR 40 million. The lower GST means each megawatt will be about INR 2–2.5 million cheaper. For a 500 MW solar park, that adds up to more than INR 1 billion in savings — enough to make tariffs sharply more competitive.
These cost savings are not limited to developers. By reducing project expenditure, the reform is expected to lower levelised tariffs, easing the financial strain on power distribution companies. Nationwide, this could translate into annual savings of INR 20–30 billion in power procurement expenses.
Aluminium industry among the biggest winners
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