KARACHI: Retailers have abruptly increased the prices of solar power systems, even though the government’s proposed 18% sales tax on imported solar panels is set to be enforced from July 1, pending final budget approval.
Vendors at Regal Chowk in Saddar said that the price increase was a surprise to customers and blamed importers for it. After learning of the sudden increase, some customers walked away, but others kept buying in spite of the price uncertainty.
According to a trader, a 5kW solar system currently costs between Rs600,000 and Rs700,000, which includes an inverter, water-based battery, mounting frames, wiring, and installation. Meanwhile, a 3kW system now costs Rs400,000-500,000, and a 6kW setup is priced at Rs700,000-800,000.
Buyers Stunned by Rising Costs
“We had no choice but to adjust our prices after importers raised costs due to the upcoming 18% tax. The increase isn’t our fault,” one trader explained.
Another vendor mentioned that a 5kW system with a lithium battery now sells for Rs800,000-850,000, up from Rs700,000-750,000 before the FY26 budget announcement. A 3kW lithium-based system is priced at Rs750,000, while a water battery version costs Rs350,000-400,000.
“Prices fluctuate based on brand quality, with warranties ranging from two to three years for panels, inverters, and batteries,” he noted, adding that some shops sell cheaper, unbranded products without warranties.
Traders warned that the market, dominated by Chinese imports due to a lack of local production, could see reduced demand if prices continue climbing.
Boosting Domestic Solar Manufacturing
In contrast, M. Zakir Ali, CEO of Inverex Solar Energy, supported the government’s 18% tax on imported panels, calling it a step toward promoting local manufacturing. But he warned that without further policy backing, taxes by themselves wouldn’t be enough.
Ali suggested, “The government should also introduce tax exemptions for local producers, even though the tax is a positive move.” He stressed the need to reduce taxes on imported machinery and raw materials in order to make domestic manufacturing viable.
Ali recommended a 5% protective duty on finished imported panels and urged authorities to support technology transfer, workforce training, and easier financing for investors.
“Without incentives like tax-free zones, the new tax could fuel smuggling and market instability,” he warned.
He noted that while a few local solar panel manufacturers exist, their output is too low to meet demand. “Local assembly plants may take another year or two to become operational, but once established, they could even support exports,” Zakir added.
