The proposed cut in GST rates on solar equipment and assorted devices run on solar energy are expected to reduce costs for developers, and manufacturers, and help accelerate the adoption of key non-fossil fuel energy.

The GST Council Meeting is expected to cut the rates on renewable energy products such as photovoltaic cells, solar cookers, solar power generators and s\ on from 12 % to 5%.

Boost for local manufacturing

The move could give a further push to efforts to build solar cells locally, and reduce import reliance. “Solar cell imports currently attract duties of 25% to 40%. If GST is reduced, it will make Indian products more competitive,” said Sandeep Agarwal, Founder and Managing Director of Greenzo Energy India, adding that it will also encourage more companies to set up production units.

He said if GST rates are reduced, costs of Solar cookers , solar generators will come down and adoption of solar products will increase.

Agarwal of Greenzo said the reduction in GST may reduce the cost of solar power by 10% to 15% and positively impact prices of green hydrogen, making it more affordable .

Lower tariffs, wider adoption

Gautam Mohanka, director at Gautam Solar said the cut will increase accessibility of solar installations to households, businesses and farmers.”The tax break will not only boost energy security and encourage new project pipelines but also contribute meaningfully to India’s climate action commitments and its global responsibility to combat climate change,” he said.

A senior executive with a consultancy firm said if there is an 8 percentage point reduction in GST, costs will go down by Rs 30 to Rs 35 lakh per MW for utilities, allowing reduction in 10 paise per unit for companies especially in new projects .

However since solar is just 10% of the power purchase basket of utilities even now, end users will get a benefit of only 1 or 2 paise per unit.

Vinay Rustagi, chief business officer, Premier Energies said it will be important to synchronise the rate reduction with inputs to avoid an inverted duty structure and associated red tape.