India: National Subsidy Scheme Phase II

In June 2014, the Ministry of New and Renewable Energy (MNRE) launched new guidelines for solar hot water systems in the residential, commercial and industrial sector under the National Solar Mission Phase 2 (see the attached document). The subsidy rates of 30 % of the benchmark costs remain the same as in financial year 2013-2014, but a correction factor will be applied: If the government notices that solar water heaters prices in tenders are below benchmark costs (see the table below), the 30 % / 60 % subsidy level is applied to these reduced prices instead of the specified benchmark costs.
What is new as well is that systems which have a capacity above 10,000 litres per day, or an equivalent collector area, will be deemed an individual project and must be described in a project report. Applications for smaller systems will again be gathered by the Channel partners and combined into one application before submission.

Country / region


Name of programme

Capital subsidy scheme for installation of solar thermal systems

Type of incentive

Subsidy, combined with low-interest loan

Eligible technologies

  • Evacuated tube collectors
  • Flat plate collectors with liquid working fluid
  • Air collectors
  • Concentrating solar collectors

Applicable sectors

Residential, industrial, commercial and public

Subsidy Amount

30 % of average benchmark system costs, which includes the costs of the collector, tank and mounting system. The benchmark costs in 2014-2015 have been set as listed below (30 % of the benchmark costs in brackets).

  • Residential users of flat plate collector systems: 11,000 INR/m² (3,300 INR/m²)
  • Commercial users of flat plate collector systems: 10,000 INR/m² (3,000 INR/m²)
  • Residential users of vacuum tube collector systems: 8,500 INR/m² (2,550 INR/m²)
  • Commercial users of vacuum tube collector systems: 8,000 INR/m² (2,400 INR/m²)

Special Category States: Subsidy is 60% of benchmark costs
Benchmark costs are adapted from time to time.

Maximum subsidy

Between 2,400 and 6,600 INR/m², depending on technology and site.

Benchmark costs and maximum subsidies are adapted from time to time.

Terms of loan

Beneficiaries are eligible to obtain a bank loan, which would be lent at the bank’s commercial rates (usually, 10 to 12.5 %). The last monthly rates at MNRE incentive level are waived off.

Requirements for system

Components must be certified by the Bureau of Indian Standards (BIS) in case of flat plate collectors and according to MNRE standards in case of vacuum tube collector systems.

Finance provider

  • Indian Renewable Energy Development Agency (IREDA)
  • National Housing Bank
  • National Bank for Agriculture and Rural Development via its national banking network
  • Municipal corporations
  • Renewable Energy Service Companies (RESCOs)

Total funds

Not specified, but will be limited to National Solar Mission target of 8 million m2 between April 2013 and March 2018. The amount of funding may be reviewed from time to time, however.

Funding source

Public funds

Effective date

1 April 2014

Expiration date

Incentives will be paid as long as funds are available.


Last review of this tabloid

July 2014


Secretary, Ministry of New and Renewable Energy, Government of India

Phone: +91-11-24361481


Baerbel Epp

Bärbel Epp is Founder and Director of the German communication and market research agency solrico and editor-in-chief of