Budget 2026: Enhanced PLI, tax breaks to cut Chinese dependence on solar, say industry players

To reduce dependence on China for solar projects, industry players expect the union budget FY27 to further ensure ease of doing business for the sector through reduced corporate tax, GST exemptions, and easy financing options.

India has a target to achieve 500GW of non-fossil energy by 2030 and solar will be the major contributor.

Vineet Mittal, Chairman, Avaada Group said that Union Budget 2026–27 is a critical opportunity to remove structural cost distortions and create long-term investment certainty.

"On direct taxes, we strongly advocate zero income tax on dividends from renewable energy SPVs to their holding companies to enable efficient capital recycling and lower tariffs. On indirect taxes, energy storage must be recognised as a core power asset. While electricity is GST-exempt, BESS and pumped storage services attract 18% GST with no ITC benefit. Reducing GST on storage charges to NIL will directly lower the cost of renewable power," he said.

Mittal also sought zero Basic Customer Duty and Integrated Goods and Services Tax for at least five years on capital equipment for manufacturing solar glass, ingots, wafers, cells, modules, batteries and advanced TOPCon and HJT technologies, where imported equipment currently inflates project costs by 20–30%.

There has been concerns on the solar industry dependence on China and any supply chain disruption could badly impact the growth.

"We strongly advocate for an enhanced PLI scheme specifically for polysilicon, ingot, and wafer manufacturing. This targeted approach will enable India to rapidly establish critical upstream capabilities and reduce our heavy dependence on imports, particularly from China which controls over 80% of global solar manufacturing," said Prashant Mathur, CEO, Saatvik Green Energy Limited.

There has been growing demand for reduced corporate tax rates for solar manufacturers and preferential lending rates through priority sector lending to enhance competitiveness and attract greater investments.

"We urge the government to introduce accelerated depreciation benefits for solar manufacturing equipment, similar to those provided for solar projects, which will significantly improve capital efficiency and returns," he added.