As part of the Government of India’s Azadi Ka Amrit Mahotsav celebrations and the drive towards a sustainable, self-reliant economy, the Ministry of New and Renewable Energy (MNRE) has announced a landmark reform that could redefine India’s clean energy landscape. Following the 56th GST Council meeting held on 3rd September 2025, the Goods and Services Tax (GST) on renewable energy devices has been reduced from 12% to 5%—a decisive move to accelerate the country’s energy transition and empower millions of citizens.
This reform embodies the vision of Hon’ble Prime Minister Shri Narendra Modi to transform GST into a “Good and Simple Tax”, and simultaneously strengthen India’s economic and environmental future.
Making Solar Affordable for Every Indian Household
One of the most immediate and tangible benefits of this GST rationalisation is the reduction in the cost of rooftop solar systems under the PM Surya Ghar: Muft Bijli Yojana. A standard 3 kW rooftop system will now cost ₹9,000 to ₹10,500 less, making clean energy accessible to a wider base of households. This will not only reduce electricity bills but also encourage greater participation in India’s solar revolution, especially in urban and semi-urban homes.
Empowering Farmers through PM-KUSUM
Farmers stand to gain significantly under this reform. A 5 HP solar pump—widely used under the PM-KUSUM scheme—will now be ₹17,500 cheaper. With 10 lakh such pumps targeted, the farming community could collectively save ₹1,750 crore. This reduces the financial burden on farmers and enables sustainable irrigation practices, strengthening India’s commitment to doubling farmers’ income and promoting green agriculture.
Lower Renewable Project Costs = More Affordable Power
The GST cut will also reduce capital costs for large-scale solar projects. For example, a 1 MW utility-scale solar project could save ₹20–25 lakh, while a 500 MW solar park could see cost savings exceeding ₹100 crore. This cost-efficiency will improve tariff competitiveness, ease the financial load on distribution companies (DISCOMs), and save ₹2,000–3,000 crore annually in power procurement across the country.
This could lead to lower electricity costs for consumers, further enhancing energy access and affordability for all.
Boosting Domestic Manufacturing and Job Creation
The GST rationalisation is a powerful enabler for India’s Make in India and Aatmanirbhar Bharat missions. By reducing module and component costs by 3–4%, the reform will attract fresh investment into domestic RE manufacturing hubs, aligned with India’s goal of 100 GW of solar manufacturing capacity by 2030.
With each GW of manufacturing capacity supporting around 5,000 jobs, the move could create 5–7 lakh green jobs over the next decade. This includes roles in installation, maintenance, R&D, supply chain, and component production—strengthening the renewable energy ecosystem.