When India pledged net-zero emissions by 2070 at COP26, it was a blueprint for a new development model where growth and sustainability rise together. Four years later, the 56th GST Council meeting provided a powerful new instrument to advance that vision. The introduction of GST 2.0—which included a rationalisation of tax rates on renewable energy devices, green technologies and sustainable transport— has embedded climate action into the heart of fiscal policy. This is not merely about making green products cheaper. It is about re-engineering economics so that clean power and sustainable choices become the most viable pathway for citizens and industries.
The decision to reduce GST on solar panels, photovoltaic cells and wind turbines directly cuts the capital costs of renewable energy projects. This translates into more affordable tariffs for households and industries, accelerating adoption. For farmers, lower taxes on solar pumps mean reduced irrigation costs. For manufacturers, the reform strengthens the domestic supply chain under the government’s production-linked incentive scheme. By enhancing competitiveness, India can position itself as a global hub for renewable energy manufacturing. For consumers, this will mean tangible savings on power costs and easier access to clean energy options. In essence, GST 2.0 ensures that renewable power is no longer an aspirational option but an accessible reality for all sections of society.
The impact of this reform goes beyond the domestic arena. As the world prepares for COP30 in Brazil, there is unprecedented scrutiny on whether nations can align fiscal, industrial and climate policies in ways that are credible and durable. Europe is moving ahead with its carbon border adjustment mechanism, which taxes carbon-intensive imports. The US is leveraging its Inflation Reduction Act to back clean manufacturing and ensure strategic leadership in the green economy.
India’s rationalisation of GST on green technologies is a uniquely indigenous response to these global shifts. It creates affordability for domestic consumers while aligning India’s trade and industrial ecosystem with the realities of an emerging low-carbon global economy. By making renewable technologies cheaper and scaling domestic production, India is future-proofing its exports against carbon tariffs and ensuring that its manufacturing sector remains competitive in a world where sustainability standards are increasingly non-negotiable.
Equally significant are the reforms in waste management and green transport. The decision to reduce GST on effluent treatment services from 12 percent to 5 percent provides a clear incentive for industries and municipalities to adopt cleaner waste management solutions. This will cut pollution and simultaneously create green jobs in plant operations and maintenance.
Lowering GST on biodegradable bags from 18 percent to 5 percent accelerates India’s transition away from single-use plastics, a shift that directly aligns with international commitments under the UN Environment Assembly’s Global Plastics Treaty. With these steps, India positions itself among countries taking systemic measures to combat plastic pollution and moves closer to building a circular economy.
The transport sector, responsible for nearly 12 percent of India’s emissions, has also received a major green push. Passenger buses and minibuses—now taxed at 18 percent, instead of 28 percent—will encourage the modernisation of fleets, expand public transport and reduce congestion and emissions. Trucks and goods carriers, which move nearly 70 percent of India’s freight, will become more affordable. This will help phase out ageing, polluting fleets and reduce emissions across the logistics chain. Importantly, it also aligns with global supply chain decarbonisation efforts that multinational corporations increasingly expect from their partners and suppliers.
GST 2.0 sends a powerful signal to international investors and policymakers that India is aligning its fiscal architecture with its climate commitments under the Paris Agreement and its nationally determined contributions. It reassures trade partners that India’s manufacturing ecosystem is moving towards lower emissions and greater sustainability.
This reform also strengthens India’s role in the Global South. Many developing countries are grappling with the same challenge that India faces—of balancing growth with sustainability at a time when green technologies remain costly. Each nation is at a different stage of development, but all need low-cost, scalable and sustainable solutions. By showing how fiscal policy can make renewables affordable, India has created a replicable model that can inspire climate-positive taxation across the developing world. It is a model India can proudly champion at COP30 and beyond.
These reforms will be remembered as the moment when India gave fresh depth and direction to the idea of green growth. It marks the stage where fiscal and climate policy were woven into a single framework, and when India’s green transition derived strength from the vitality of its own economy. With GST 2.0, India has shown that a nation can aspire to grow, compete and lead while advancing decisively along the path of sustainability. This reflects not only the essence of genuine climate leadership but also the vision of an India whose future will be defined by its unwavering commitment to green development.
Anil K Antony | National Secretary and Spokesperson, BJP
(Views are personal)