Government Schemes and Financial Incentives Driving Solar Adoption in India

Rapid changes in the environment are affecting the Earth’s quality of life, and these changes have become a major concern for the world. Every country is thinking about switching to renewable energy to improve the quality of life by reducing its carbon footprint. India is also part of them, and the energy consumption in this country is very high because of the population growth. In the current era, energy is a basic necessity for everyone. Hence, the Indian government is focusing on promoting awareness about renewable energy and helping people to transition toward solar energy by giving subsidies. The Indian government actively participates in this transition through its schemes and financial incentives.

Key Government Schemes for Solar Energy

(i) PM-KUSUM Scheme

The land of India is so rich in agriculture, and productivity is very high. For this reason, this country has a vast population of farmers, and they are our country’s backbone. Our farmers are invaluable, hence, the government of India has always been trying to support them through schemes and incentives. Although India is moving forward toward solar energy, it is promoting awareness about solar energy through PM-KUSUM, this scheme provides financial assistance for their solar transition. This benefits farmers who can set up solar pumps and grid-connected solar power plants; further, they can also decentralize the solar system, and people can also generate additional income by selling excess power to the grid.

(ii) Rooftop Solar Subsidy Scheme

Solar energy has a high initial cost, which is why homeowners may think about switching to solar energy.  To ensure financial security and make people aware of renewable energy benefits, the indian government offers up to 40% subsidy for solar systems up to 3 kW. A 20% subsidy is available for solar systems ranging from 3 kW to 10 kW under the National Solar Mission. Although it reduces the upfront cost and is reliable for homeowners, whether they live in urban or rural areas.

(iii) Solar Park Scheme

The country’s infrastructure is vital for development because it is the foundation for the country’s economic growth, social well-being. For the government, it’s important to encourage large-scale solar installations to attract people and raise awareness of solar energy’s importance. Hence, the government provides financial incentives to support infrastructural development under “Development of Solar Parks and Ultra Mega Power Projects,” such as the Khavda Solar Park in Gujarat.

(iv) Grid-Connected Solar Projects through SECI

If India wants to stand out in the world in solar energy and make a rapidly growing solar market, India needs investment in the solar sector. For any business, investment is crucial, so for solar energy, it’s important to attract investors. SECI conducts auctions and tenders for large-scale solar projects, offering long-term power purchase agreements (PPAs) to ensure price stability for developers. This is helpful for India’s solar sector growth.

Financial Incentives and Budget Allocations

Why is renewable energy important, and what are the key reasons behind the Indian government’s strong emphasis on solar energy in recent years?

(i) Union Budget 2025 Provisions

The Indian government is focusing on groundbreaking green initiatives and also provides loans so you can install it first and pay at your convenience, and this model could reshape how communities access energy. According to the union, the budget 2025 allocated ₹26,549 crore for renewable energy, which is a 53% jump from last year. A new ₹10,000 Cr Solar Fund will be allocated specially for enhancing infrastructure and to build five solar mega parks, each park larger than Mumbai City, and it also covers 2 million rooftop solar panel installations, which will be enough to power 6 million homes.

 By 2027, Expect:

(ii) Production-Linked Incentive (PLI) Scheme

India’s ₹24,000 crore PLI extension is set to accelerate solar self-reliance by boosting domestic solar manufacturing capacity, which will sixfold from 8 GW to 48 GW while aiming for 23 %+ panel efficiency. This will be helpful for India because it cuts import reliance by 80% to 35%, and it is the first-ever incentive for polysilicon. Solar technology with a strong R&D push for next-generation perovskite technology, while ensuring sustainability through mandatory recycling units in all PLI-funded plants.

Industry Transformation

(iii) Tax Benefits

India is offering a 10-year tax exemption for solar projects operational by March 2030, covering both power generation and transmission infrastructure, with an additional 2-year bonus exemption for projects in the Himalayan region. To qualify for implementation, projects must meet key requirements, including MNRE registration by 2026, securing 60% or more financing from Indian institutions, and ensuring 5% community equity in projects located in tribal areas. By 2027, India’s solar initiatives are expected to unlock ₹1.2 lakh crore in capital, create over 800,000 new jobs in solar finance and technology sectors, resulting in a 40% decrease in the overall tax burden associated with solar energy projects.

Financial Impact Snapshot

In short

India’s solar revolution empowers 3 million farmers through PM-KUSUM’s solar pumps while slashing home energy costs by 40%, with rooftop subsidies for 2 million installations by 2027. Five mega-parks larger than Mumbai will add 25GW capacity, equivalent to 12 nuclear plants, supported by a ₹24,000 crore PLI scheme boosting domestic panel production sixfold and cutting prices 25%. Strategic tax breaks (10-year exemptions, 80% depreciation) have tripled investor returns, mobilizing ₹1.2 lakh crore to cut 38 million tons of CO₂ annually while creating 800,000 jobs. Equity mandates direct 60% of funds to solar-deficient states and ensures 5% tribal stakes, accelerating inclusive progress toward 500GW renewables by 2030 and lighting 12 million homes with clean energy.

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