GST cut to 5% on renewables to unlock ₹1.5 lakh crore savings, 7 lakh green jobs by 2030: Govt

The rationalisation of Goods and Services Tax (GST) on renewable energy devices to 5% is expected to accelerate India’s clean energy transition, generate up to seven lakh green jobs and unlock investment savings of ₹1–1.5 lakh crore by 2030, the Ministry of New & Renewable Energy (MNRE) said on Wednesday.

The GST Council, in its 56th meeting on September 3, approved the reduction of GST on renewable energy equipment and components from 12% to 5%. The revised rates will take effect from September 22.

“The rationalization of GST rates across the renewable energy value chain from 12% to 5% will bring down the cost of clean energy projects, making electricity more affordable and directly benefiting households, farmers, industries, and developers,” MNRE said in a statement.

The ministry said the capital cost of a utility-scale solar project, typically ₹3.5–4 crore per MW, will now see savings of ₹20–25 lakh per MW.

For a 500 MW solar park, this would translate into cost reductions of over ₹100 crore.

A 3 kW rooftop solar system will also become cheaper by ₹9,000–10,500 under the PM Surya Ghar: Muft Bijli Yojana.

Similarly, farmers under the PM-KUSUM scheme will collectively save ₹1,750 crore on 10 lakh solar pumps, with each 5 HP pump becoming cheaper by around ₹17,500.

The move is expected to cut renewable tariffs, easing the burden on distribution companies (DISCOMs) and resulting in annual nationwide savings of ₹2,000–3,000 crore in power procurement costs.

The tax rationalisation is likely to reduce module and component costs by 3–4%, boosting domestic manufacturing under the Make in India and Aatmanirbhar Bharat initiatives.

With India targeting 100 GW of solar manufacturing capacity by 2030, the ministry said the change could support the creation of 5–7 lakh direct and indirect jobs in the sector over the next decade.

Highlighting the climate benefits, MNRE said faster deployment enabled by the GST cut could avoid an additional 50–70 million tonnes of CO₂ emissions per year by 2030, helping India meet its Paris Agreement commitments and target of 500 GW of non-fossil fuel capacity by 2030.

The decision “underscores the government’s commitment to ensuring that clean, affordable, and sustainable energy becomes the foundation of India’s journey towards Viksit Bharat,” MNRE said.