India’s rooftop solar market has the potential to expand to 132 GW from the current installed capacity of 17 GW, with annual demand expected to reach up to 15 GW by 2030, according to the Indian Solar Manufacturers Association (ISMA). The assessment points to a substantial pipeline for domestic manufacturers of solar cells, modules, inverters and balance-of-system components.

ISMA said the sector’s current attractiveness was being driven mainly by subsidies under the PM Surya Ghar: Muft Bijli Yojana (PMSGMBY), combined with state-level capital incentives. The programme has also changed expectations around the future trajectory of electricity tariffs and improved the economics of residential rooftop installations.

A typical 3 kW residential rooftop system takes between 2 and 6.7 years to recover its cost after central and state subsidies in the 10 states with the highest rooftop solar adoption. However, the analysis found that payback periods varied considerably without subsidies, with high-tariff states such as Maharashtra and Kerala offering quicker returns than Uttar Pradesh, Gujarat and Tamil Nadu.

The scheme is supporting installations even in states where rooftop solar would not yet recover its cost without assistance. About 60 per cent of the capacity installed under PMSGMBY is located in such states, indicating that subsidies are closing the payback gap and broadening adoption across residential markets.

ISMA said deployment was increasingly constrained by grid-hosting and metering capacity rather than a lack of consumer interest. It identified policy continuity beyond March 2027, when the current phase of PMSGMBY expires, as a key priority. Early clarity on a possible next phase, including PM Surya Ghar 2.0, would help sustain demand, prevent disruption and give manufacturers greater confidence to plan investments and capacity.