Solar Firms Slash Prices as GST Cut Benefits Reach End Users
Solar industry players have quickly reflected the GST rate cuts in their pricing strategies, signalling a strong and coordinated response across the renewable energy value chain.
September 26, 2025. By Abha Rustagi
Calling the reform a “huge boost” for the sector, Tuhin A. Sinha, National Spokesperson, BJP, said, “GST rationalisation will give a huge boost to the renewable energy sector. For solar slabs, the GST rate has come down to 5 percent. Moreover, ease of compliance will benefit MSMEs as a whole. Right now, the RE industry is valued at USD 25 billion. With these incentives, it should gallop ahead and become twice its current size in the next 5-6 years.”The Ministry of New and Renewable Energy (MNRE) echoed this optimism, calling the reform a “game-changer,” projecting INR 2,000–3,000 crore in annual power procurement savings. Developers report capital cost reductions of INR 20–25 lakh per MW, translating into over INR 100 crore in savings for a 500 MW solar park.
The revised rates cover solar cookers, lanterns, water heaters, generators, and PV cells, including modules and panels. GST on non-lithium-ion batteries (lead-acid, sodium, flow) has also been cut from 28 percent to 18 percent, enhancing support for grid-scale energy storage.
Industry Response Swift and Decisive
Top industry players have moved quickly to reflect the rate changes in their pricing strategies, signalling a strong and coordinated response across the renewable energy value chain.
Manjunath N Reddy, Founder & MD of DhaSh Group of Companies, welcomed the move as a milestone for the domestic manufacturing ecosystem. “The Government’s latest GST announcement is a welcome reform that will significantly benefit the renewable energy sector. As the founder of India’s largest solar component manufacturer, I view this move as a step towards greater transparency, reduced project uncertainties, and improved competitiveness for domestic manufacturing. Policy clarity creates market stability. With this GST reform, India is better positioned to deliver not only renewable energy capacity but also sustainable growth, skilled employment, and long-term energy security,” he said.He added that it would “drive cost efficiency across solar projects and encourage innovation and large-scale adoption of solar technologies.”
Luminous Power Technologies confirmed that it will pass on 100 percent of the GST savings across its solar and backup power product lines. The revised prices cover solar panels, hybrid inverters, and power backup systems sold through its nationwide retail and distribution network. “The GST reduction is a landmark step towards accelerating India’s clean energy journey. At Luminous, we are proud to pass on the full benefit, making solutions more affordable and accessible,” said Preeti Bajaj, CEO & MD, Luminous Power Technologies.
ReNew Energy also announced a full pass-through of the benefits. The company revealed direct savings of up to INR 15 lakh per MW for DCR modules and INR 10 lakh per MW for non-DCR modules in utility-scale projects. “This move will catalyse adoption across segments, from large-scale developers to rooftop consumers and farmers,” said Sumant Sinha, Founder, Chairman & CEO, ReNew.The GST cut translates into tangible savings for end-users, with 3 kW residential rooftop systems under the PM Surya Ghar Muft Bijli Yojana becoming INR 5,000 cheaper, and 5 HP solar pumps under PM-KUSUM seeing savings of up to INR 12,000 per unit, amounting to a collective INR 1,750 crore if scaled to 10 lakh pumps.
The MNRE estimates a 3–4 percent drop in component costs due to the tax cut, strengthening the Make in India initiative and enhancing global competitiveness. With India targeting 100 GW of solar manufacturing capacity by 2030, the reform could unlock INR 1–1.5 lakh crore in investments and create 5–7 lakh new jobs across the value chain.
Union Minister Pralhad Joshi confirmed that a fully indigenous solar manufacturing chain, from polysilicon to inverters, is in the works. He also hinted at upcoming PLI schemes and the introduction of an Approved List of Models and Manufacturers (ALMM) for solar inverters, ensuring quality and scale in deployment.
With India aiming for 300 GW of renewable energy by 2030, even a 2–3 percent cost reduction could fast-track deployment and avoid up to 70 million tonnes of CO₂ emissions annually.
Developers report that the policy clarity is already helping them close power purchase agreements faster and boost investor confidence, which is crucial for long-term project viability.
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