Pakistan government on Tuesday proposed the budget for the financial year 2025-26, revealing its intention to impose 18% sales tax on imported solar panels.
The proposed tax would help the local industry grow, Finance Minister Muhammad Aurangzeb said in his budget speech in the National Assembly.
The development comes amid a solar boom in the country, with net-metering capacity in Pakistan jumping to 2,813 megawatts (MW) as of March 31, 2025, according to the Pakistan Economic Survey 2024-25 released on Monday.
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The net-metering capacity rose by over 300MW from the previous fiscal year, when the capacity stood at around 2,500MW, as per NEPRA’s State of the Industry Report 2024.
The 300MW jump in net-metering capacity was largely attributed to a sharp fall in solar panel prices and the financial incentives net-metering offers to consumers.
However, with 18% tax proposed in the budget for FY26, the prices for solar panels may increase.
Despite being a low-income country plagued by economic and social issues, a green revolution is taking place in Pakistan and the South Asian country has quietly emerged as one of the world’s largest markets for the growing solar industry.
According to the Global Electricity Review 2025 by Ember, an energy think tank in the UK, Pakistan imported 17 giga-watts (GW) of solar panels in 2024, joining the ranks of leading solar nations.
“Solar is now so cheap that large markets can emerge in the space of a single year – as evidenced in Pakistan in 2024,” read the report published earlier this year.
“Amid high electricity prices linked to expensive contracts with privately-owned thermal power stations, rooftop solar installations in Pakistan’s homes and businesses soared as a means of accessing lower-cost power.”
A recent research report stated that China exported more solar panels to Pakistan than to many G20 nations, with over 16 gigawatts (GW) imported in 2024 alone.
The report titled ‘Leader of One or Leader of None – China’s Choice for Clean over Coal in Pakistan’ published by think tank Renewables First said more than 39GW of solar panels, nearly all from China, entered Pakistan in the last five years.
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These solar panels are “enough to exceed three-quarters of Pakistan’s installed national generation capacity”, the report said.
“Pakistan may be the first to experience this clash between legacy coal and democratised solar at this scale, but it will not be the last. If China gets this right, it will not just lead to Pakistan’s energy transition. It will prove itself as the architect of a new Global South energy paradigm, one that is fast, fair, and truly transformative,” the report envisaged.
