The imposition of an 18% sales tax on solar panel imports, which is set to take effect on July 1, 2025, has prompted a price hike in the market, with traders blaming importers for the increase.
Despite the tax still pending formal approval, many sellers have already raised prices, leading to concern among consumers and traders alike.
According to traders, the sudden price increase has caused frustration among potential buyers, with some leaving after learning of the price surge. One trader quoted the price of a 5kW solar system, including the inverter, battery, and installation, at Rs600,000-700,000, compared to Rs400,000-500,000 for a 3kW system, and Rs700,000-800,000 for a 6kW system.
Another trader said that a 5kW system with a lithium battery is now priced at Rs800,000-850,000, up from Rs700,000-750,000 before the budget announcement.
Traders explained that the price hike is a direct result of the 18% sales tax on solar panel imports, and they emphasized that they are not responsible for the increase.
The market, dominated by Chinese brands, is already grappling with the lack of locally assembled panels, and these higher prices may further suppress demand.
The Pakistan Solar Association (PSA) has voiced strong opposition to the proposed tax, urging the government to reconsider its decision.
The association argued that this tax could undo the progress made in solar energy adoption, which has provided affordable and sustainable energy options for citizens while reducing reliance on fossil fuels.
The PSA contended that Pakistan’s solar industry, which is still in its nascent stages, lacks large-scale, high-efficiency manufacturing, making the proposed tax unfair and counterproductive.
Waqas Moosa, chairperson of PSA, stated, “This tax will make solar energy less affordable for consumers and could harm our climate goals.”
He stressed that the tax would make solar energy less competitive compared to fossil fuels, which contribute to Pakistan’s growing import bill and energy challenges.
On the other hand, solar solutions providers welcomed the government’s move to promote local manufacturing through the 18% tax but warned that broader policy reforms are necessary. They suggested that tax-free initiatives for local manufacturers, such as reduced duties on raw materials and machinery, would be a more effective strategy to foster a competitive local solar panel industry.
They also cautioned that without supportive measures, the tax could lead to market destabilisation, with potential smuggling and grey market activities.
The PSA has called on the government to adopt a more balanced approach that supports the growth of the solar sector, attracts investment, and promotes clean energy development while considering the long-term economic and environmental benefits.
