What is the CFA Scheme?
Central Financial Assistance, CFA, is the MNRE programme that channels direct cash subsidy from the central government to specific categories of solar beneficiaries. CFA differs from indirect support (accelerated depreciation, tax breaks, soft loans) because the money lands in the beneficiary's bank account after project commissioning.
The current flagship CFA is PM Surya Ghar Muft Bijli Yojana, launched in February 2024, targeting 1 crore residential rooftop installations by March 2027. PM Surya Ghar provides INR 30,000 per kW for the first 2 kW, INR 18,000 per kW for the next 1 kW, capping the subsidy at INR 78,000 for 3 kW and above.
Earlier CFA schemes (MNRE Rooftop Solar Programme Phase II) provided 40 percent subsidy for the first 3 kW and 20 percent for 3 to 10 kW, but the quantum was lower and disbursement slower. PM Surya Ghar simplified, accelerated, and substantially increased the subsidy. PMKUSUM Components A, B, C are separate CFA streams for agricultural solar.
Why CFA matters for solar EPCs and customers
CFA fundamentally changes residential solar economics. Without subsidy, a 3 kW rooftop system costs INR 1.8 to 2.2 lakh. With PM Surya Ghar CFA of INR 78,000, the net cost drops to INR 1 to 1.4 lakh, which fits within typical household financing capacity. CFA is the lever that converts the residential rooftop market from niche to mainstream.
For EPCs, CFA changes the sales conversation. Instead of selling on energy savings alone, EPCs sell on "your subsidy pays for almost half the system." CFA also disciplines vendor quality through empanelment requirements: only state-empanelled vendors can serve PM Surya Ghar customers.
For DISCOMs and government, CFA accelerates renewable adoption toward 500 GW by 2030 target. CFA-driven residential solar also reduces DISCOM load on peak hours and supports grid resilience.
How CFA is disbursed
- Beneficiary registration. On pmsuryaghar.gov.in.
- Vendor selection. From state-empanelled list.
- System design and quotation. EPC prepares BOQ.
- Order placement. Consumer pays vendor share.
- Installation. EPC delivers and commissions plant.
- DISCOM net metering application. EPC coordinates.
- Inspection and approval. DISCOM verifies installation.
- Net meter installation. DISCOM completes.
- Completion certificate. Uploaded to portal.
- DBT disbursement. Subsidy lands in beneficiary account within 30 days.
Benefits of CFA scheme
- Lower customer outlay. Substantial cost reduction.
- Vendor quality control. Empanelment discipline.
- DBT efficiency. Direct to beneficiary account.
- Scheme transparency. Public portal tracking.
- Market expansion. Residential solar mainstream.
- State top-up stacking. Combined support significant.
- Grid resilience. Distributed generation grows.
Limitations and challenges
Vendor empanelment limits. Only empanelled EPCs participate.
Documentation burden. Multiple steps per application.
DISCOM inspection delays. Subsidy disbursement waits.
State variation. Different processes per state.
No subsidy for commercial. Larger projects rely on tax benefits.
Budget allocation cycles. Subsidy availability varies by fiscal year.
CFA across schemes
| Scheme | Beneficiary and CFA |
|---|---|
| PM Surya Ghar | Residential, INR 78,000 for 3 kW |
| PMKUSUM Component A | Farmers, decentralised solar plants 0.5 to 2 MW |
| PMKUSUM Component B | Standalone solar pumps, 30+30 percent central plus state |
| PMKUSUM Component C | Solarisation of grid pumps, 30+30 percent |
| Government buildings rooftop | Various ministry schemes |
| State top-up schemes | Maharashtra, Gujarat, Karnataka, AP, TN, Kerala |
Quick facts
| Full form | Central Financial Assistance |
|---|---|
| Administered by | MNRE |
| Current flagship | PM Surya Ghar Muft Bijli Yojana |
| Residential rate | INR 30k/kW first 2 kW, INR 18k/kW next 1 kW, cap INR 78k |
| Disbursement | DBT to beneficiary account |
| Timeline | 30 days post-net metering approval |
| State top-ups | Many states offer additional |
Common mistakes about CFA
- Treating CFA as automatic. Vendor empanelment and process compliance required.
- Skipping state top-up check. Misses additional subsidy.
- Inflating BOQ to capture more subsidy. CFA is capped, not percentage.
- Wrong documentation. Delays DBT.
- Non-empanelled vendor. Customer ineligible.
- No GST on full price. GST applies before subsidy.
- Quoting CFA against commercial. Not applicable.
- Ignoring net metering as gating step. Subsidy waits.
Key takeaways
- CFA is central direct cash subsidy from MNRE.
- PM Surya Ghar is the current flagship for residential rooftop.
- INR 30,000/kW for first 2 kW, capped at INR 78,000 for 3 kW.
- DBT disbursement within 30 days of net metering approval.
- State top-up subsidies available in several states.
- PMKUSUM Components A, B, C are agricultural CFA streams.
- Commercial solar uses tax benefits, not CFA.
Frequently Asked Questions
What is the CFA Scheme?
CFA stands for Central Financial Assistance. It is the MNRE subsidy scheme that provides direct subsidy support to specific categories of solar projects, primarily rooftop solar for residential and government buildings, and certain off-grid solar applications. PM Surya Ghar Muft Bijli Yojana is the current flagship CFA scheme for residential rooftop.
Who is eligible for CFA?
Eligibility varies by sub-scheme. PM Surya Ghar is for residential households. Earlier MNRE CFA Phase II covered residential, government, and institutional rooftop. PM-DAY (Pradhan Mantri Awas Yojana) housing residents may have additional eligibility. CFA for off-grid projects covers households in unelectrified areas.
How is CFA disbursed?
Through DBT (Direct Benefit Transfer) to the beneficiary's bank account after solar plant commissioning and DISCOM verification. For PM Surya Ghar, the residential subsidy lands in the consumer's account within 30 days of successful net metering activation.
What is the current PM Surya Ghar CFA?
INR 30,000 per kW for the first 2 kW (INR 60,000), INR 18,000 per kW for the next 1 kW (INR 18,000), capped at INR 78,000 for 3 kW and above. State governments may add top-up subsidies (Maharashtra, Gujarat, Karnataka have additional state subsidies).
Is CFA available for commercial solar?
Generally no for direct cash subsidy. Commercial solar receives indirect support via accelerated depreciation (40 percent), tax benefits, and net metering. Direct CFA is targeted at residential, government, and disadvantaged groups.
How do I apply for CFA?
For PM Surya Ghar: register on pmsuryaghar.gov.in, select empanelled vendor, install solar plant, complete DISCOM net metering, submit completion certificate. Subsidy disburses via DBT after verification. Vendor selection is through state-level empanelment lists.
What documentation is required?
Aadhaar, PAN, bank details for DBT, electricity bill, property ownership documents, vendor invoice, completion certificate, net metering approval. Vendor coordinates document compilation; consumer authorises submission.
Are there separate state CFA schemes?
Yes. Many states run state-level rooftop subsidies that top up central CFA. Gujarat, Karnataka, Maharashtra, Andhra Pradesh, Tamil Nadu, Kerala have active state schemes. Combined central plus state subsidy can cover 60 to 80 percent of residential solar cost.
Does CFA affect GST treatment?
GST is calculated on full project cost; subsidy is post-tax DBT to the consumer. The vendor invoices full GST-inclusive price; CFA arrives separately. ITC eligibility for the consumer (mostly not applicable for residential) is unchanged by CFA.
What was the earlier MNRE CFA scheme?
MNRE Rooftop Solar Programme Phase II (2019 to 2022) provided 40 percent subsidy for first 3 kW, 20 percent for 3 to 10 kW, for residential. Phase II was replaced by PM Surya Ghar in February 2024 with much higher subsidy quantum and faster DBT.
Is there CFA for solar pumps?
Yes via PMKUSUM Component B (standalone solar pumps for farmers) and Component C (solarisation of grid-connected pumps). Subsidy is 30 percent from central, 30 percent from state, 30 percent loan, 10 percent farmer share. Direct cash subsidy via DBT.
What is the CFA budget for FY 2025-26?
PM Surya Ghar has substantial multi-year budget allocation (over INR 75,000 crore through 2027). Annual allocations are revised in Union Budget. Verify current year specifics via MNRE budget statements and pmsuryaghar.gov.in updates.
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- PM Surya Ghar Muft Bijli Yojana portal. Subsidy rates and process. pmsuryaghar.gov.in
- MNRE official notifications. CFA scheme guidelines. mnre.gov.in
- Union Budget statements. Annual CFA allocations.
- State nodal agency portals. State top-up subsidies (MEDA, GEDA, KREDL, etc.).
- PMKUSUM portal. Component A, B, C subsidies.
- NSEFI sector advisories. Scheme updates.
- CAG audit reports on solar subsidies. Disbursement review.
Written by QuickEstimate Editorial, QuickEstimate Editorial (Surat).
Last updated: 4 June 2026.