India Slashes Taxes to Accelerate Green Transition
By Dilip patil
In a decisive step to advance clean energy adoption and support its climate goals, the Indian government has rolled out significant tax reductions for the renewable energy sector, targeting both imported and domestically sold products.
The policy comprises two major initiatives: a reduction in customs duties on key imports from 12% to 5% and a parallel cut in the Goods and Services Tax (GST) on a broad range of renewable energy devices, also from 12% to 5%. These measures aim to lower costs, making green technologies such as solar water heaters, biogas plants, and wind turbines more affordable for consumers, manufacturers, and project developers.
The customs duty reduction covers an extensive array of renewable energy products, including:
- Solar thermal systems: Solar water heaters, solar cookers, and related systems (HS code 8419 12).
- Solar power generation: Photovoltaic cells (assembled or unassembled), solar generators, and solar lighting such as lanterns and lamps.
- Wind energy: Windmills and Wind Operated Electricity Generators (WOEG).
- Emerging technologies: Biogas plants, waste-to-energy systems, and ocean/tidal wave energy devices.
- Components: Parts essential for manufacturing these technologies, bolstering domestic production.
In a complementary move, the GST Council has reduced the tax rate from 12% to 5% on a comprehensive list of renewable energy devices and components, including: - Solar power systems: Solar panels, solar inverters, solar power generating systems, and solar power-based devices.
- Solar lighting and appliances: Solar lanterns, solar lamps, solar torches, and solar streetlights.
- Solar pumps: Solar-powered water pumps for agricultural, domestic, and industrial use.
- Biogas systems: Biogas plants and related equipment for energy production.
- Wind energy devices: Components for windmills and Wind Operated Electricity Generators (WOEG).
- Waste-to-energy systems: Devices and plants converting waste to energy.
- Ocean/tidal energy devices: Equipment for harnessing ocean or tidal wave energy.
- Key components: Parts and accessories used in the manufacturing, installation, or maintenance of the above renewable energy devices, including solar cells, modules, batteries, and other essential inputs.
Industry leaders have welcomed these measures, highlighting that the reduced duty on imported photovoltaic cells and components, combined with the GST cut, eliminates tax distortions and enhances the competitiveness of Indian-made products. These changes are expected to significantly reduce project costs and accelerate India’s journey toward energy independence.
Effective immediately, the revised tax policies are set to drive renewable energy adoption, strengthen domestic manufacturing, attract investment, and create jobs in the green technology sector, giving fresh momentum to India’s sustainable development agenda. - (Author Dilip Patil is Co-chair of IFGE)
