Lower tax rates to ease cost pressure, enable faster adoption of clean energy, say industry players

New Delhi, Sep 4 (PTI) The GST rate reduction on renewable energy devices and parts will ease cost pressures across the power value chain enhancing viability, and enabling faster adoption of clean power, industry players said on Thursday.

At its 56th meeting on Wednesday, the GST Council approved slashing GST rate on renewable energy devices and parts from 12 per cent to 5 per cent.

The council also decided to reduce the levy from 12 per cent to 5 per cent on fuel cell motor vehicles including hydrogen vehicles based on fuel cell technology, besides solar cookers and solar water heater and systems.

The new Goods and Services Tax (GST) rate will be effective from September 22.

Sharad Mahendra, Joint MD & CEO of JSW Energy, said: "The GST reduction provides meaningful benefits across JSW Energy's portfolio. In the thermal business, particularly where plants utilise domestic coal, the rationalised GST (removal of compensation cess of Rs 400/tonne) will help lower fuel costs, thereby reducing the cost of thermal power. This will help reduce the cost of base load for the country and would also help improve financial health of distribution companies." Sumant Sinha, Founder, Chairman and CEO, ReNew, said the reduction of tax on solar equipment and batteries will lower electricity costs, enhance industrial competitiveness, and accelerate India's clean energy transition. Removal of the compensation cess on coal and merging it into a higher GST rate of 18 per cent will also effectively bring down costs of thermal power. Broader rationalisation will further stimulate domestic consumption and encourage export sectors.

Vineet Mittal, Chairman, Avaada Group, said, the decision to slash GST on green hydrogen and electrolysers would lower the production cost and help promote sustainable energy solutions. Also, reduced tax burden would attract more capital into the segment and make investments more viable.

Ashish Khanna, CEO, Adani Green Energy, said: "This progressive move will not only accelerate India's transition to a low-carbon economy, but will make clean energy more affordable and accessible to millions. By reducing the input cost of developing clean energy projects and improving project viability, it will unlock new opportunities for growth and innovation." Neerav Nanavaty, CEO, BluPine Energy, said that the GST cut on renewable energy equipment is a timely move unlocking EPC capex and lowering the levelised cost of energy amid volatile input and logistics costs.

Rajeev Kashyap, SVP and General Manager for India, Middle East, and Africa, Nextracker, said competitive and higher-yield projects will attract greater investment into the sector, fuelling India's renewable energy ambitions. At Nextracker, we are deeply aligned with the Make in India vision, and this policy change further empowers us to scale local manufacturing of solar trackers while contributing to the nation's clean energy goals.

Vivek Bhatia, Managing Director and CEO -TKIL Industries, said that cutting GST on renewable devices and fuel-cell vehicles aligns India with its decarbonisation strategy. It gives manufacturers a better case for boosting sustainable solutions.

Vijay Nirani, Founder & Managing Director, TruAlt Bioenergy, said the reduction of GST from 12 per cent to 5 per cent on biogas plants is a forward-looking reform that strengthens project viability while unlocking new opportunities for green entrepreneurship nationwide.

According to Parmod Sagar, Chairman, Managing Director and CEO, RHI Magnesita India, the decision to reduce the tax rate, particularly on cement, will further support the economy's consistent growth momentum. The refractory industry, which is integral to cement manufacturing, is also expected to benefit, as it has long faced challenges due to high input costs of raw materials.

Echoing similar views, Hiten Parekh, President – Global Sales, GREW Solar, said reducing GST rates on renewable energy components is a transformative step for the sector. By lowering the cost of solar parts, it eases barriers for both established developers and emerging players.

Girishkumar Kadam, Senior Vice President & Group Head, ICRA, said: "The rationalisation of GST rates for solar PV modules and wind turbine generators is expected to reduce the capital cost for solar and wind power projects by 5 per cent.

"This is expected to reduce the cost of generation for solar power projects by 10 paise per unit and for wind power projects by 15-17 paise per unit. This would reduce the capital cost for under-implementation projects and also likely to reflect in upcoming bids. This in turn will benefit the power distribution companies in the form of lower power purchase cost, going forward." PTI ABI HVA