India’s Rooftop Solar Rollout Slows as Banks and States Hesitate on Loans

New Delhi/Mumbai – India’s ambitious rooftop solar expansion under the PM Surya Ghar programme is falling well short of government targets, with only about 2.36 million installations completed so far out of a goal of 4 million by March 2026, officials, vendors and analysts said. The shortfall is due in large part to delays and rejections of bank loans for residential solar projects and a lack of active support from some state utilities, which together are hindering uptake despite government subsidies designed to cover up to 40 % of installation costs.

Introduced in February 2024, the rooftop programme aims to accelerate clean energy adoption among households by providing substantial financial incentives and simplified financing pathways. However, many applicants are facing obstacles in the bank financing process, with lenders citing concerns about documentation, loan risk and potential defaults. As a result, roughly 60 % of applications remain pending approval and about 7 % have been rejected, according to recent data. Some banks have also been demanding collateral for loans under ₹200,000, a requirement that contradicts the scheme’s guidelines and has frustrated both vendors and consumers.

State-owned power distributors have also been reluctant to promote rooftop solar, in part because they stand to lose revenue as wealthier households reduce their grid electricity consumption. Analysts warn this hesitation could dampen progress toward India’s broader clean energy goals of 500 gigawatts of non-fossil capacity by 2030 and reducing reliance on coal-fired power. Officials from the Ministry of New and Renewable Energy noted that the scheme has still benefited over 3 million households so far, but stressed that overcoming financing and administrative hurdles will be essential for meeting long-term targets.

Industry insiders say improving standardised documentation requirements, better co-ordination between banks and state utilities, and measures to lower lenders’ perceived risks will be key to accelerating residential solar adoption across the country.