GST Council Backs Green Growth with Rate Cuts on Renewable Energy Devices
Source： solarquarter
The 56th Goods and Services Tax (GST) Council meeting has delivered a major boost for India’s renewable energy and clean mobility sectors. The Council approved a reduction in GST on renewable energy equipment and components from 12% to 5%, a move aimed at cutting capital costs and encouraging wider adoption of green technologies.
Key beneficiaries include solar cookers, solar water heating systems, and fuel cell motor vehicles, including hydrogen-based models. By lowering tax incidence, these products are expected to become more affordable for both households and businesses, accelerating the shift towards sustainable energy solutions.
Commenting on the development, Girish Kumar Kadam, Senior Vice President & Group Head, ICRA Ltd., noted that the rationalisation of GST rates for solar PV modules and wind turbine generators could reduce the capital cost of solar and wind projects by nearly 5%. This would, in turn, lower the cost of generation for solar by about 10 paise per unit and for wind by 15–17 paise per unit. He added that such savings are expected to reflect in upcoming bids and would ultimately reduce the power purchase costs for distribution companies.
The Council also reaffirmed its support for clean mobility by continuing the concessional 5% GST rate on electric vehicles. While this step sustains affordability and demand, experts believe that broader rationalisation across batteries, charging infrastructure, and swapping services could streamline costs and strengthen the EV ecosystem further.
For the automobile market, the lower tax is expected to improve affordability, particularly in entry-level segments where price sensitivity is highest. This may revive consumer demand, ease inventory pressures, and create positive momentum across allied industries such as auto components and servicing.
Overall, the GST Council’s decisions reflect a strong policy alignment with India’s clean energy and mobility goals, combining fiscal reform with long-term sustainability.