India Slashes Solar GST, Developers Eye Cheaper Tariffs And Restarts

• India cut GST on solar and wind hardware to 5%, a move expected to lower project costs, revive stalled bids, and pressure tariffs down.

India has moved to cut the cost of clean power at the source. In a broad tax package, New Delhi reduced the Goods and Services Tax on solar PV modules and wind turbine generators from 12% to 5%. Analysts estimate the shift trims capital costs for upcoming projects by roughly 5%—enough to revive stalled bids and put fresh downward pressure on tariffs. For a market targeting 500 GW of non-fossil capacity by 2030, the timing is hard to miss.

The impact will be uneven in the near term. Developers that have not yet purchased equipment may be expected to pass savings through in competitive tenders, while those that already procured at higher tax rates could justify existing prices with documentation. Market players also flagged the need to revisit some power purchase agreements so that benefits flow cleanly without unsettling financing structures already in place. Equipment makers have begun signaling they will pass the cut along; Waaree, for example, publicly committed to doing so.

Beyond the arithmetic, the policy signals consistency in India’s push to accelerate clean capacity even as global supply chains remain volatile. A lower tax wedge can help offset higher borrowing costs, while giving state utilities a clearer path to award auctions that have been hanging back amid pricing uncertainty. The move should also improve bankability for distributed projects, from commercial rooftops to agri-feeder programs, where every basis point of capex matters for lenders.

The watch-outs: clarity on treatment for already-awarded projects, and ensuring that state regulators factor the change into tariff approvals without slowing timelines. If those pieces align, the GST cut could translate quickly into megawatts on the ground and rupees saved on power bills—precisely the sort of pragmatic boost India’s solar pipeline needs heading into 2026.