India Slashes GST on Solar & Wind Energy: Boost to Green Tech Adoption

On September 4, 2025, the GST Council made a landmark move to accelerate India’s clean energy transition by slashing tax rates on renewable energy equipment—particularly solar and wind technologies. In a strategic policy twist, GST on such equipment has been reduced sharply from 12% to 5%, while the levy on coal and lignite has been hiked to 18% from 5%, signaling a clear shift in focus toward sustainable energy sources .

What Changed and When It Kicks In

• Solar cells (assembled or not), modules, and myriad solar devices like cookers, water heaters, lanterns, and lamps now attract a lower 5% GST.

• Wind energy apparatus—including windmills and generators—along with biogas plants, waste-to-energy units, tidal/ocean energy devices, and even hydrogen fuel-cell vehicles, have also received the tax cut.

• The reform is part of a broader “GST 2.0” overhaul—simplifying slabs, cutting rates, and harmonizing the regime—set to rollout from September 22, 2025, coinciding with the first day of Navaratri.

Why This Matters: A Three-Pronged Advantage

1. Lower Costs, Faster Adoption

Industry projections suggest a potential 10–15% cut in solar power costs, making installations more affordable for households, businesses, and farmers alike.

2. Strong Backing from Stakeholders

The National Solar Energy Federation of India (NSEFI) has welcomed the move, calling it a key enabler in the nation’s clean-energy momentum. Meanwhile, renewable energy manufacturers see this as a pivotal shift that could spur production and uptake across sectors .

3. Strategic Energy Structural Shift

With coal now taxed more heavily and renewables incentivized, India is realigning its energy pricing framework to reflect environmental priorities and long-term sustainability goals.

India’s Renewables Momentum: Setting the Context

These tax changes coincide with a period of ambitious renewable energy growth:

• India's cumulative solar capacity has soared, crossing 100 GW by January 2025, supported by schemes under the National Solar Mission (NSM).

• As of April 2025, solar power generation was at a record high of 107.94 GW AC, with power generation reaching 144.15 TWh, displacing millions of tonnes of coal.

• India also boasts one of the world’s largest wind energy footprints—about 50 GW installed as of March 31, 2025—and a tremendous untapped potential of nearly 695 GW onshore.

What Lies Ahead

1. Boost to Domestic Manufacturing
   The GST cut is expected to catalyze supply chain scaling across solar and wind segments—from components to battery storage systems.

2. Consumer and Developer Incentive
   Lower taxes could incentivize rooftop solar uptake, mini-grid units, and hybrid energy projects, driving faster green adoption.

3. Future-Proofing Energy Goals
   These reforms shine a brighter light on India’s path toward its COP26 pledge of 500 GW of non-fossil energy capacity by 2030. With solar and wind gaining even more economic traction, the momentum is firmly on the side of clean energy.