The Reuters report, citing three government sources, also said the government is seeking a rollback in goods and services taxes (GST) on the devices to make up a shortfall in domestic output amid rising demand for renewable energy. 

The "renewable energy ministry has held talks with the finance ministry to approve its request to cut the import tax on solar panels from 40% to 20%," said the report.

"The two ministries may make a recommendation to India's Good and Services Tax Council to lower the goods and services tax (GST) on solar panels to 5%, from the 12% imposed in 2021," the report said citing sources.

The change in import duty will come as a boost for solar power companies such as Tata Power, Adani Green and Vikram Solar which won solar power supply contracts by quoting aggressive tariffs but face shortage of local equipment to complete the contracts.

The proposal comes as Modi looks at achieving a target of 365 gigawatts (GW) of installed solar capacity by 2031-32, part of a green energy push that extends from promoting electric cars to sustainable aviation fuel.

The government had imposed the 40% solar panel import duty in April 2022 and a 25% tax on solar cells to discourage Chinese imports, in line with Prime Minister Narendra Modi's plan to become more self-reliant and cut emissions by scaling up renewable energy generation.

India's current annual solar panel manufacturing capacity is 32 GW per annum but the requirement is of 52 GW as demand for green, cheaper energy is rising rapidly from corporate offices, industrial units and big factories.