India’s solar energy policies and 2025 market outlook

According to the Central Electricity Authority (CEA) of India, the country’s cumulative PV installed capacity reached 97.9 GW in 2024, with 24.5 GW newly added, more than doubling compared to 2023. With the advancement of government tenders and incentive measures, India’s PV market is expected to continue growing, contributing to the global energy transition. In this article, we examine India's key PV policies and the demand forecast for 2025.
 

India’s solar PV demand driven by incentive policies implemented through projects

1. Ground-mounted and C&I projects

In 2014, India launched the Development of Solar Parks and Ultra Mega Solar Power Projects, aiming to add 40 GW of PV installed capacity by the 2026 fiscal year (ending March 31, 2026). Under the plan, each MW can receive a subsidy of INR 2 million (approximately USD 24,000) or 30% of the total project cost, whichever is lower. 

In 2019, India launched the Government Producers Scheme (CPSU Scheme Phase-II), aiming to add 12 GW of installed capacity. The program provides a total of INR 85.8 billion (approximately USD 1.03 billion) in funding to subsidize the construction of ground-mounted power plants. The CPSU scheme subsidies can be combined with those from the Development of Solar Parks and Ultra Mega Solar Power Projects.

For C&I solar projects, the most notable development is the Green Energy Open Access Rules (GEOA) introduced in 2022. These rules allow renewable energy buyers to directly sign PPAs with sellers, paying only grid usage fees and other charges. The minimum electricity procurement requirement has also been reduced from the initial 1 MW to the current 100 kW, thus boosting demand for small-scale C&I PV projects.
 

2. Residential and off-grid projects

In the residential sector, India launched the Prime Minister’s Solar Household Scheme (PM-Surya Ghar) in February 2024, targeting the addition of 40 GW of distributed PV installed capacity by the 2026 fiscal year. With an investment of INR 750 billion, this program aims to provide up to 300 kWh of free electricity per month for 10 million households. The subsidy amount varies based on the installed capacity. 

• Projects smaller than 2 kW: INR 30,000 (USD 360) /kW

• Projects between 2-3 kW: the first 2 kW can receive the same subsidy, with the remaining capacity receiving 18,000 INR (USD 216) /kW; 

• Projects larger than 3 kW: Fixed subsidy of INR 78,000 (USD 936).

The off-grid projects are primarily driven by the Prime Minister’s Farmer Energy Security and Upliftment Campaign (Pradhan Mantri Kisan Urja Suraksha Evam Utthaan Mahabhiyan, PM-KUSUM scheme). Launched in 2019 with a total budget of INR 344.2 billion (approximately USD 4.13 billion), this scheme aims to add 34.8 GW of PV installed capacity. 

Key initiatives under this scheme:

• Construction of 500 kW to 2 MW solar power plants;

• Installation of 1.4 million off-grid solar agricultural pumps; and 

• Conversion of 3.5 million grid-connected agricultural pumps to solar power. 

Depending on the region and project type, the central and state governments provide subsidies covering more than 30% of the total project costs.
 

Localization of PV manufacturing stimulated by demand-side incentive policies

To support the growth of solar PV demand, India has been promoting local manufacturing policies. In 2022, India introduced a Basic Custom Duty (BCD) on imported solar products, imposing 25% on cells and 40% on modules.

Additionally, the Production Linked Incentive (PLI) scheme, approved in 2021, allocated INR 240 billion (USD 2.88 billion) in finding across two tender phases to support solar production. Subsidies are based on sales, localization, and efficiency. The awarded capacity is expected to be operational by 2026.

The Approved List of Modules and Manufacturers (ALMM) requires government projects to use locally made modules. By January 2025, the list includes 64.6 GW of module capacity, meeting India's demand. Starting in June 2026, a new cell list will require government projects to use locally assembled cells and modules.
 

India’s solar PV market outlook in 2025

India’s cell capacity is limited due to a lack of technology. Therefore, even with a 25% import duty, Chinese cells remain competitive in the country.  Despite the implementation of ALMM, most of India’s market is still dominated by locally assembled Chinese modules. 
If the ALMM for cells is introduced in 2026, India’s cell capacity and production timing will be crucial. Since Chinese cells are cost-effective, the requirement for local cell assembly could increase project costs and hinder solar market growth.

On the demand side, India’s solar park, utility-scale projects, Prime Minister’s Solar Home Program, and Farmer Energy Program all aim to meet 2026 installation targets. Under the National Electricity Plan (NEP), India must achieve 280 GW of solar PV capacity by 2030, requiring an average addition of 30 GW per year. With continued support, 2025 will be a pivotal year for India’s solar market, with demand expected to reach 35-40 GW.