Quick Facts
What state and central subsidies are
Solar subsidies in India come from two government levels: the central government (through MNRE) and state governments (through state nodal agencies). Both work together to reduce the cost of solar installations, primarily for residential rooftop and agricultural solar.
The central subsidy is uniform across India and is currently delivered through PM Surya Ghar Muft Bijli Yojana for residential rooftop. The maximum central subsidy is Rs 78,000 for a 3 kW residential system.
State subsidies vary widely. Some states provide significant additional subsidies; others provide none. Combined central plus state subsidies in best states can reduce residential solar cost by 40 to 50 percent.
Understanding both layers and how they combine is essential for residential customers, installers, and commercial decision-makers.
Central subsidy: PM Surya Ghar
Launched February 2024, PM Surya Ghar Muft Bijli Yojana is the current central residential solar subsidy:
Eligibility: Indian residential customers with valid grid connection.
System size: 1 to 10 kW typical (subsidy maxes at 3 kW).
Subsidy structure: Rs 30,000 (first 1 kW) + Rs 30,000 (second 1 kW) + Rs 18,000 (third 1 kW) = Rs 78,000 maximum.
Vendor: Must be empanelled with the central portal.
Application: Online via pmsuryaghar.gov.in.
Disbursement: DBT to customer bank account post-installation and inspection.
Timeline: Typically 30 to 60 days after commissioning.
The scheme aims to install solar on 1 crore (10 million) homes by 2027, with substantial central allocation.
State subsidies overview
State subsidies vary significantly:
Gujarat:
Pioneer in residential solar.
Additional state subsidy on top of central.
Streamlined application process.
GEDA (Gujarat Energy Development Agency) is state nodal.
Maharashtra:
Additional state subsidy.
MEDA (Maharashtra Energy Development Agency) is nodal.
Madhya Pradesh:
Additional state subsidy.
Streamlined for residential.
Rajasthan:
State-specific provisions.
Renewable promotion through RREC.
Karnataka:
KREDL is nodal.
Variable provisions across categories.
Tamil Nadu:
State-specific framework.
TEDA is nodal.
Punjab, Haryana:
Limited state subsidies.
Net metering provisions strong.
Other states:
Varying provisions.
Some no state subsidy beyond central.
Check state-specific guidelines and updated portals.
Subsidy combination examples
Example: 3 kW residential system in Gujarat:
System cost: Rs 1.65 lakh (Rs 55,000 per kW).
Central subsidy: Rs 78,000.
State subsidy: Rs 9,000 (varies; example).
Net cost: Rs 78,000 (53 percent reduction).
Payback (after subsidy): 4 to 5 years.
Example: 3 kW residential system in West Bengal:
System cost: Rs 1.65 lakh.
Central subsidy: Rs 78,000.
State subsidy: None.
Net cost: Rs 87,000 (47 percent reduction).
Payback: 5 to 6 years.
The state element creates meaningful regional differences.
Application and disbursement
The application process:
Application: Customer applies on pmsuryaghar.gov.in.
Empanelled vendor: Select from list of approved installers.
Installation: System installed per specifications.
Inspection: DISCOM inspector verifies installation.
Commissioning: Net metering activated.
Subsidy: Central subsidy transferred via DBT.
State subsidy: Per state procedure (varies).
For state subsidies:
Process varies. Some integrated with PM Surya Ghar workflow.
Some require separate application.
Disbursement may be to customer or to installer.
Specific state nodal agency procedures apply.
Both subsidies require valid documentation and compliance with technical and procedural requirements.
Agricultural solar subsidies
For agricultural solar (PM KUSUM):
Component A: Decentralised solar on farmland. State and central support.
Component B: Standalone solar pumps. Up to 60 percent central + state subsidy.
Component C: Grid-connected agricultural pump solarisation. Various structures.
Separate from PM Surya Ghar (residential). Different application processes.
Agricultural solar receives generally higher subsidy percentages than residential, reflecting policy priority for farmer income enhancement.
Commercial and industrial considerations
C&I solar generally doesn’t qualify for direct subsidies:
PM Surya Ghar is residential only.
Some states have specific commercial schemes.
Main C&I benefits: Accelerated depreciation (AD), GST relief, MAT credit.
C&I solar economics depend more on tariff savings, AD, and GST treatment than subsidies.
For specific commercial schemes:
Some states (Gujarat, Maharashtra, Tamil Nadu) have C&I solar schemes.
Solar park preferential allocation in some states.
PPA structures for utility-scale.
Specific state policies should be checked.
Common subsidy mistakes
Skipping subsidy application. Customer pays full price unnecessarily.
Incomplete documentation. Delays or denials.
Non-empanelled vendor. Subsidy not available.
Wrong system sizing. Subsidy capped at 3 kW; oversizing without subsidy benefit.
Confusion between central and state. Some customers think only one exists.
Bank account issues. DBT failure causes subsidy delay.
Missing inspection. Subsidy contingent on inspection.
Best practices
For residential customers:
Check both central and state subsidies for your state.
Use central portal pmsuryaghar.gov.in.
Select empanelled vendor.
Maintain documentation through process.
Track application status.
For installers:
Educate customers on combined subsidies.
Maintain empanelment in target states.
Help customers with application and documentation.
Track disbursement and follow up.
For state agencies:
Streamlined processes integrated with central.
Clear communication on combined benefits.
Effective disbursement mechanisms.
For policy:
Coordinate state and central programmes.
Reduce documentation burden.
Faster disbursement.
Standards and references
Central subsidies are governed by MNRE PM Surya Ghar guidelines. State subsidies are governed by state-specific solar policies and nodal agency procedures. Both are subject to DBT and KYC requirements. State Electricity Regulatory Commission orders govern related net metering provisions.
Related glossary terms
Key takeaways
Solar subsidies in India come from central government (PM Surya Ghar Muft Bijli Yojana) and state governments (varying state schemes). Central CFA provides up to Rs 78,000 for residential rooftop systems. State subsidies vary widely from none to Rs 30,000+ per kW additional in best states like Gujarat and Maharashtra. Combined subsidies can reduce residential solar costs by 40 to 50 percent. Application processes differ between central (pmsuryaghar.gov.in) and state portals. Commercial and industrial customers typically don’t qualify for direct subsidies but benefit from accelerated depreciation, GST treatment, and net metering. Agricultural solar follows separate PM KUSUM framework.