Government Policies and Incentives for Solar Energy Projects in India (2025 Update)
India is leading the way in renewable energy adoption, with solar power playing a central role in its green energy transition. As part of the government’s commitment to reaching a 500 GW non-fossil fuel capacity by 2030, numerous policies and incentives have been introduced to encourage businesses and industries to invest in solar power. This page outlines the latest subsidies, tax benefits, and government schemes available for solar energy projects in India in 2025, along with actionable tips on how businesses can take full advantage of these programs.
1. Government Schemes to Promote Solar Power
India’s government offers several programs to ease the adoption of solar energy across businesses, industries, and commercial enterprises:
a) Pradhan Mantri Kisan Urja Suraksha Evam Utthaan Mahabhiyan (PM-KUSUM)
This scheme is designed to support farmers and rural areas in adopting solar energy for irrigation and other agricultural needs, as well as providing them with a source of income by selling excess energy to the grid.
- Benefits for Businesses:
- Subsidies for installing solar-powered pumps and decentralized solar plants.
- Incentives for businesses involved in rural development and agricultural support.
- How to Leverage:
- Businesses operating in rural areas can access subsidies for solar installation.
b) Solar Rooftop Scheme
Under the National Solar Mission, the government is encouraging residential, commercial, and industrial sectors to install rooftop solar systems. This scheme provides financial assistance to businesses for the installation of solar power systems.
- Benefits for Businesses:
- 30% subsidy on rooftop solar installations for businesses.
- Loans available at favorable interest rates for installation costs.
- How to Leverage:
- Apply for financial assistance through authorized agencies or solar rooftop suppliers.
- Combine this scheme with energy-efficient operations to reduce operational costs significantly.
c) The Solar Park Scheme
For large-scale solar projects, the government has developed solar parks across the country, offering businesses a ready-to-use platform for setting up their solar power systems.
- Benefits for Businesses:
- Access to land with minimal infrastructure costs.
- Preferential rates and easy access to grid connectivity.
- How to Leverage:
- Collaborate with the government and solar developers to establish a solar project in these parks.
2. Tax Benefits and Financial Incentives for Solar Projects
The Indian government offers several tax benefits and incentives aimed at making solar investments more attractive for businesses.
a) 100% Accelerated Depreciation
Businesses investing in solar power systems are eligible to claim 100% depreciation on the total cost of the solar power system in the first year itself. This can reduce your taxable income, providing significant savings in the short term.
- Benefits for Businesses:
- Immediate tax relief by claiming full depreciation on solar energy systems.
- Faster recovery of investment in solar infrastructure.
- How to Leverage:
- Ensure you work with a qualified chartered accountant to correctly apply the depreciation on your solar equipment and maximize savings.
b) GST Benefits for Solar Installations
The Goods and Services Tax (GST) on solar power systems has been reduced to a low rate of 5% from the usual higher tax brackets, making it more affordable for businesses to invest in solar energy.
- Benefits for Businesses:
- Reduced upfront costs on equipment such as solar panels, inverters, and other components.
- How to Leverage:
- Make sure to claim your GST credits on solar equipment purchases.
c) Green Energy Bonds
India’s government has launched green energy bonds for businesses investing in renewable energy projects. These bonds come with tax exemptions on interest income for investors, making them an attractive option for businesses seeking to fund solar energy installations.
- Benefits for Businesses:
- Tax-free interest on green bonds.
- A viable financing option for large-scale solar projects.
- How to Leverage:
- Explore investment in green energy bonds to raise funds for your solar projects.
3. State-Level Incentives and Subsidies
Several Indian states have introduced additional incentives to promote solar power. These can vary based on the region, so it’s essential for businesses to stay informed about the local policies that can further enhance the financial viability of their solar investments.
- Maharashtra, Gujarat, and Rajasthan offer additional subsidies for rooftop solar systems and large-scale solar installations.
- Tamil Nadu provides benefits such as interest-free loans for solar installations, especially for industries.
How to Leverage:
- Check with your state government’s renewable energy department for localized benefits that can supplement national policies.
- Participate in state-sponsored solar programs for added financial incentives and resources.
4. Actionable Tips for Businesses to Take Advantage of Government Solar Incentives
To fully maximize the benefits available for solar power projects, businesses can follow these actionable tips:
- Plan Your Solar Investment Smartly
- Before starting a solar installation, thoroughly research the latest government schemes, tax benefits, and local incentives.
- Work with a trusted partner like InTechGreens, who can guide you through the application process and help you apply for government subsidies.
- Integrate Solar Into Your Long-Term Strategy
- Incorporate solar energy into your sustainability and long-term growth strategy. This will not only help you save costs but also position your business as an environmentally responsible leader in the market.
- Leverage Government Financial Assistance
- Apply for subsidies, low-interest loans, and other financial assistance programs designed to reduce the initial investment costs.
- Take full advantage of the tax benefits like accelerated depreciation and reduced GST rates.
- Stay Updated with Policy Changes
- The government is continuously updating solar energy policies to further boost renewable energy adoption. Regularly check for the latest updates to ensure you’re making the most of new incentives and opportunities.
- Work with Experienced Solar Service Providers
- Partner with experienced solar installers and service providers like InTechGreens, who are well-versed in navigating government policies and can help optimize your installation to fit the best available programs.
Conclusion
India’s growing focus on renewable energy, especially solar, presents significant opportunities for businesses to reduce their energy costs while contributing to a cleaner environment. By leveraging government schemes, tax benefits, and subsidies, businesses can maximize the financial advantages of investing in solar power.
At InTechGreens, we are committed to helping businesses navigate these opportunities and deliver high-quality solar installations that align with both financial and environmental goals. Contact us today to explore how we can help your business take full advantage of India’s solar energy incentives.