GST Rate Cut to Accelerate Clean Energy Push, Save up to ₹1.5 Lakh Crore by 2030: MNRE

New Delhi, September 17, 2025 – The Ministry of New & Renewable Energy (MNRE) said on Wednesday that the rationalization of GST rates for renewable energy equipment will reduce project costs considerably, accelerate India’s clean energy shift, and unlock savings of up to ₹1.5 lakh crore on installing 300 GW of capacity by 2030.

Major Boost to Renewable Targets

India has ambitious plans of reaching 500 GW of renewable energy capacity by 2030. On August 31, 2025, the installed capacity in the country was at 193 GW, comprising 123 GW of solar and 53 GW of wind power. With 300 GW yet to be installed, even a slight 2-3% decrease in prices can release enormous investment capacity, said MNRE.

GST Rationalisation Impact

The GST rate along the value chain of renewable energy has been lowered from 12% to 5%. This action is likely to:

• Slash capital expenses of solar projects of utility scale by ₹20-25 lakh per MW.
• Save more than ₹100 crore on a 500 MW solar park, making the tariff more competitive.
• Lower distribution companies’ power procurement expenses by ₹2,000–3,000 crore per year.

Benefits for Households and Farmers

• Rooftop Solar: A 3 kW rooftop solar plant will now be more economical by ₹9,000–10,500, enabling lakhs of households to adopt solar power under the PM Surya Ghar: Muft Bijli Yojana.
• Solar Pumps: A 5 HP solar pump, previously priced at ₹2.5 lakh, will now be more economical by almost ₹17,500. With 10 lakh pumps, farmers as a group can save ₹1,750 crore under PM-KUSUM.
• Rural Access: Low-cost mini-grids, livelihood opportunities, and solar pumps will enhance rural and underserved energy access.

Manufacturing Growth and Employment Opportunities

Reduced GST will lower the cost of modules and components by 3-4%, which will make locally produced renewable equipment more competitive. With India aiming for 100 GW of solar manufacturing in 2030, the change is likely to:

• Attract new investment into domestic centers.
• Facilitate creation of 5–7 lakh direct and indirect employment opportunities in the next decade.

Environmental and Global Impact

Every GW of solar installation prevents 1.3 million tonnes of CO2 emissions each year. Accelerated deployment through GST savings can prevent 50–70 million tonnes of emissions every year until 2030, enhancing India’s climate action pledge under the Paris Agreement.

Effective Date and Outlook

The new GST rates will come into force from September 22, 2025. MNRE highlighted that the reform will be helpful to consumers, farmers, developers, and manufacturers while consolidating India’s twin objectives of green growth and energy independence. This historic move places India at the forefront of the world’s clean energy transition and represents a clear step towards the vision of Viksit Bharat in 2047.

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