New Delhi, Sep 16 (IANS) In a significant development, the GST rationalisation is set to provide a major push towards advancing India’s climate goals by making renewable energy, waste management, biodegradable products, and green mobility more affordable and within reach, the government said on Tuesday.

Moreover, by cutting costs, encouraging domestic manufacturing, and supporting sustainable industries, these changes will accelerate the adoption of clean energy and pollution control solutions, it said.

To begin with, GST on solar and wind devices has been reduced from 12 per cent to 5 per cent. This includes solar cookers, bio-gas plants, solar power-based devices, solar power generators, windmills, wind-operated electricity generator (WOEG), waste-to-energy plants/devices, solar lanterns/solar lamps, ocean waves/tidal waves energy devices/plants, and photo-voltaic cells, whether or not assembled in modules or made up into panels.

The reduction in GST will directly decrease the capital costs of solar panels, PV cells, wind turbines, and related devices. This reduction will enhance the viability of solar and wind projects, leading to lower tariffs for end consumers.

“The GST rate cuts will bolster domestic manufacturing by supporting India’s solar cell and module manufacturing ecosystem under PLI schemes, making domestic products more competitive against imports. This will make solar pumps more affordable, reducing irrigation costs and providing support to farmers,” according to the government.

The installed capacity of solar energy in India has increased more than 42 times, from 2.82 GW in 2014 to 119.54 GW as of July 31, 2025.

India has progressively continued the decoupling of economic growth from greenhouse gas emissions. The emission intensity of India’s gross domestic product (GDP) has reduced by 36 per cent between 2005 and 2020.

Similarly, GST on services provided by a common effluent treatment plant (CETP) has been reduced from 12 per cent to 5 per cent.

“Reducing taxes on CETPs will motivate industries to use centralised waste treatment methods, resulting in a pollution-free environment and supporting sustainable development in industrial areas. This will assist municipal corporations in implementing clean energy solutions for managing waste. The GST cuts will create green jobs in areas like waste segregation, plant operations, and maintenance,” the government highlighted.

Reduced GST on biodegradable bags (from 18 per cent to 5 per cent) makes them more affordable, encouraging consumers and retailers to move away from single-use plastics and thereby helping to decrease plastic pollution.

This supports India’s adherence to the Plastic Waste Management Rules, 2022, and reinforces the ban on single-use plastics. It will promote investment in research and development, and the expansion of biopolymers, starch-based, and compostable materials, said the government.

“As many biodegradable bag producers are small and medium enterprises or startups, the lower GST facilitates their market entry and increases demand,” it added.

–IANS

na/vd