How Rooftop Solar Finance is Powering India’s MSME Growth

Affordable financing is crucial for unlocking the potential of rooftop solar for MSMEs. High upfront costs often deter businesses, but tailored solutions like rooftop solar finance bridge this gap by offering low-interest loans, flexible repayment terms, and quick approvals.

March 06, 2025. By News Bureau

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Amar Rajpurohit

Capri Global Capital Ltd

Rooftop Solar Finance

MSME Growth in India

Rooftop solar installations

Rooftop solar energy

Rooftop solar

Ministry of New and Renewable Energy

India’s Micro, Small, and Medium Enterprises (MSMEs) are the backbone of the nation’s economy, driving innovation, creating jobs, and contributing nearly 30 percent to the GDP while employing over 110 million people.

However, rising energy costs remain a significant challenge, consuming 10-20 percent of their operating income, heavily impacting profitability, according to an earlier study by Deloitte. Such expenses weigh heavily on industries like manufacturing, textiles, and food processing and the study highlights that 50 percent of MSMEs have a connected load of 50-200 kW, but in most cases, the ‘rooftop solar potential was less than 50 percent of the connected load’ – which means the entire solar generation can be fully absorbed by such MSMEs. Thus, a sustainable option like rooftop solar energy emerges as a transformative solution, offering the dual benefits of drastically reducing power bills and supporting India's huge energy requirements.

As of March 31, 2024, India’s rooftop solar capacity reached 11.87 GW, with a record addition of 2.99 GW during 2023-2024. However, this achievement represents just a fraction of the estimated 637 GW potential identified by the Council on Energy, Environment, and Water (CEEW). With total solar capacity at 87.2 GW as of June 2024—up from a mere 1.6 GW in 2013—solar power is steadily transforming India’s energy landscape.

Barriers to Adoption
Despite its advantages, the adoption of rooftop solar faces challenges. Limited awareness, financial constraints, and technological apprehensions deter MSMEs from making the switch. Concerns about high initial costs, performance reliability, and securing financing add to the hesitation, especially when existing assets are tied to term loans.

However, the landscape is evolving rapidly. The cost of large-scale solar projects has dropped by 26 percent year-on-year, making solar one of the most affordable energy sources. Government initiatives, such as the PM Surya Ghar: Muft Bijli Yojana, are expected to benefit 1 crore households, saving INR 75,000 crore annually, according to the Ministry of New and Renewable Energy.

Government Policies Driving Solar Adoption
India’s renewable energy roadmap is bolstered by policies like the National Solar Mission, which targets 500 GW of renewable energy by 2030. Programs such as the PM-KUSUM Scheme extend financial aid for solar adoption in rural and semi-urban areas. Additional incentives, including subsidies, tax benefits, flexible payment options, accelerated depreciation, and reduced GST on solar equipment, have made solar solutions more accessible. The Atmanirbhar Bharat initiative further supports MSMEs by easing regulatory hurdles and providing financing options.

Affordable financing is crucial for unlocking the potential of rooftop solar for MSMEs. High upfront costs often deter businesses, but tailored solutions like rooftop solar finance bridge this gap. These financing products offer low-interest loans, flexible repayment terms, and quick approvals, empowering MSMEs to transition to solar energy without financial strain. Solar adoption is supported by benefits such as accelerated depreciation, which allows businesses to write off 40 percent of their solar investment in the first year, reducing taxable income. Additionally, the Input Tax Credit (ITC) on GST further lowers the initial cost, making solar solutions more financially viable.

At Capri Loans, we are simplifying this journey with innovative financing models that enable repayments through savings on electricity bills, making solar investments both practical and sustainable.

Transformative Benefits of Rooftop Solar for MSMEs
Lower Energy Costs: A rooftop solar system generates electricity at minimal ongoing costs, significantly reducing or even eliminating monthly electricity expenses. Net metering allows businesses to export surplus power to the grid, earning credits that further cut energy bills. Over a system's lifetime, these savings can fuel growth initiatives.

Quick ROI and Long-term Savings: Rooftop solar systems typically pay for themselves within five years. Beyond this period, the electricity generated is virtually free, leading to decades of cost savings. Net metering amplifies these benefits by enabling businesses to monetise surplus energy.

Reduced Reliance on Diesel Generators: MSMEs often depend on diesel generators during power outages, incurring high fuel and maintenance costs. Rooftop solar, especially with battery storage, offers a cleaner and more cost-effective alternative, ensuring uninterrupted operations without the environmental and financial drawbacks of diesel.

Protection Against Rising Energy Costs: Solar power shields businesses from inflation and volatile energy prices, offering budget stability and reducing dependence on external providers.

Energy Independence and Reliability: Solar solutions are particularly valuable in areas with unreliable grid access. For urban MSMEs, battery storage ensures seamless operations even during grid failures, boosting productivity.

Improved Profitability and Competitive Advantage: By lowering operational costs, rooftop solar enhances profitability, making properties attractive to buyers or tenants looking for sustainable, cost-efficient solutions. Adopting solar also demonstrates a commitment to sustainability—a critical factor for global companies when selecting partners. For instance, a 100-kW rooftop solar system offsets approximately 2,100 tons of CO2 annually, equivalent to planting hundreds of trees, positioning businesses as eco-conscious leaders.

Beyond financial gains, rooftop solar adoption aligns MSMEs with India’s sustainability goals, reducing the carbon footprint and contributing to a greener economy. With tailored financing options and supportive government policies, the transition to clean energy is no longer a challenge—it’s a growth opportunity.

MSMEs are not just beneficiaries of this transformation; they are at the forefront of shaping India’s renewable energy future. By embracing rooftop solar, they unlock cost savings, enhance competitiveness, and pave the way for a resilient, eco-friendly tomorrow. The future of energy is solar, and MSMEs are leading the charge.

- Amar Rajpurohit, Chief Business Officer (MSME Loans), Capri Global Capital Ltd.