18pc GST on imported solar panels to help attract foreign investment: experts

KARACHI: Industry experts have welcomed the federal government’s decision to impose 18 percent sales tax on imported solar panels, expressing hope that the move will attract foreign investment. They have also urged the authorities to introduce a comprehensive policy framework to strengthen and promote local solar panel manufacturing.

Zakir Ali, CEO of Inverex Solar Energy, a leading player in the solar energy sector, hailed the move as a step in the right direction. “The imposition of this tax is a positive development that will incentivize domestic production and reduce reliance on imports,” he said.

However, this must be accompanied by supportive policies and infrastructure to truly empower local manufacturers and ensure long-term growth of the industry.

He said the federal government’s move would attract foreign investment in the country’s solar sector, as several international companies are already exploring opportunities in this area. The establishment of new manufacturing units, he added, will also create employment opportunities and boost the local economy.

He emphasised that tax alone is not enough and more steps are required to support this initiative for the development of the domestic solar panel industry. He also warned of potential negative consequences without broader policy reforms.

“While we appreciate the government’s intention, the real game-changer would be introducing tax-free initiatives for local manufacturers of the solar panel and other related products,” Zakir said.

He also stressed the need to eliminate or significantly reduce duties on imported raw materials, machinery, and equipment to ensure cost-effective and competitive local production.

Zakir has proposed a 5 percent protective duty on finished imported panels and urged the government to facilitate technology access, skilled labor development, and simplified financing for investors.

However, he said that without supportive measures like tax-free zones for the domestic solar panel industry, the 18 percent tax on import stage could trigger a rise in smuggling through grey channels, destabilising the market.

It may be mentioned here that the federal government has proposed to impose 18 percent tax on import of solar panels to encourage the investors for the domestic manufacturing of solar panels aimed to reduce the import bill. For the past few years, import of solar panels has risen significantly in Pakistan due to continued load shedding and higher power tariff.

Copyright Business Recorder, 2025