According to local media reports, the Pakistani government proposed an 18% general sales tax on imported solar panels in its 2025-2026 federal budget.
In a speech to the National Assembly, the country's Finance Minister Muhammad Aurangzeb said the tax would help grow the local solar industry.
However, the policy has not yet been officially implemented, and it has been strongly opposed by the industry. The Pakistan Solar Energy Association (PSA) urged the government to reconsider the decision because it could slow the adoption of solar energy and increase costs.
"This policy move has the potential to reverse the significant progress Pakistan has made in solar deployment over the past few years," the industry association said. "The imposition of an 18% GST will make solar more affordable for consumers and undermine investor and stakeholder confidence in this important industry," added PSA Chairman Waqas Moosa.
According to a recent report by think tank Ember Climate, Pakistan's imports of solar panels grew rapidly last year, reaching nearly 17GW. As shown in the figure below, this is more than double the amount of solar panels imported in 2023.
According to PSA, Pakistan not only rapidly increases the number of modules it imports in 2024, it also accelerates its net metered solar PV installations from 1.3GW in June 2023 to 4.1GW in December 2024.
As Moosa explained to PV Tech Premium earlier this year, Pakistan’s rooftop PV installations soared last year in direct response to soaring electricity prices.
“The rationale for this tax to protect local manufacturing is fundamentally flawed. Currently, Pakistan has no large-scale or efficient solar panel manufacturing facilities. The few units that exist only produce low-wattage panels and do not compete directly with imported technology. Therefore, the argument for protecting local industry lacks basis and should not be made at the expense of undermining the growing green energy sector,” said PSA.
According to a new report from think tank Ember Climate, Pakistan’s solar panel imports in 2024 will be close to 17GW, more than double the amount in 2023. This surge reflects the country’s rapidly growing demand for clean energy.
In terms of residential applications, the growth of distributed PV is particularly significant. Data shows that the installed capacity of distributed photovoltaic power under the net electricity metering system has jumped from 1.3GW in June 2023 to 4.1GW in December 2024. As electricity prices continue to rise, more and more households and businesses choose to install rooftop photovoltaic systems.
These data show that imported photovoltaic modules are an important driving force for Pakistan's energy structure transformation. Policies restricting imports may hinder this positive trend.
In the early stages of energy transformation, policy stability and cost controllability are key factors in promoting market expansion. Once the price of imported photovoltaic modules rises due to taxation, it will not only weaken the installation willingness of end users, but may also affect project financing and the entry of private capital.
The Pakistan Solar Energy Association is worried that this tax policy will send confusing signals to the market, which may mislead the public into thinking that the government is tightening photovoltaic policies and even no longer giving priority to the development of clean energy.
