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India’s ₹12.9 Trillion Solar Pump Megatrend: Who Will Lead the Charge?

By
Caprize Team
June 23, 2025

India’s agricultural backbone is undergoing a structural shift — not just in how crops are grown, but in how farmlands are powered. With over 14 crore farmers in India and only 3 crore currently having access to pump infrastructure, the gap is glaring. Among these, only 10,000 pumps are solarized. The rest rely on diesel or electricity — both of which are costly and inefficient over time.

This is where the PM KUSUM scheme steps in — a government-backed solar pump initiative that’s proving to be one of India’s most promising rural energy transformations. The estimated opportunity size for the solar pump and services sector? A staggering ₹12.9 trillion, with pumps making up just 15% of that total. This is not just a green energy trend — it’s a multi-year structural growth story grounded in real demand, cost savings, and long-term policy commitment.

The Economic Case for Solar Pumps

What makes this megatrend so compelling isn’t just the market size — it’s the logic behind it. For governments, subsidizing electricity for farmers through DISCOMs has been a decades-long fiscal drag. Setting up grid infrastructure for electric pumps costs nearly ₹2 lakh per farmer, plus an additional ₹1 lakh annually in electricity. In contrast, a ₹4.5 lakh solar pump requires the government to pay only about ₹3.5 lakh after the farmer’s contribution — and recovers its cost within three years due to energy savings.

For farmers, switching to solar means no recurring electricity or diesel bills. They save nearly ₹50,000 annually while gaining reliability and autonomy. Even surplus energy, when not used for irrigation, can be routed back to the grid — with players like Shakti Pumps owning patents to enable this energy sell-back feature.

Shakti Pumps: Positioned for Scale

Shakti Pumps, one of the key players in the sector, validated the megatrend during its Q1FY25 earnings call. Despite a rain-hit quarter and upcoming elections in major states, the company posted a 30% revenue growth on a ₹1,371 crore base and guided for ₹500 crore in quarterly revenues. Over the next 3–4 years, they expect 25–30% growth annually.

Margins have also improved due to multiple levers: advance raw material planning, better solar panel negotiations, and vendor-side efficiencies. Even under conservative pricing scenarios, the company expects to maintain a 16% margin floor — thanks to softening panel prices and improved operating leverage.

Importantly, Shakti is not just sitting on strong financials — it’s executing. The company’s current capacity supports ₹2,400 crore in annual revenue, but by FY27, it will double pump production from 5 lakh to 10 lakh units. This will enable potential topline of ₹5,000 crore in coming years. The capex of ₹250 crore is already 80% funded, with no banking debt involved. Part of this will also fund its new EV motor project for 2W, 3W, and bus segments.

Oswal Pumps: Sector Confidence Reinforced

Oswal Pumps, another major player in the space, addressed key industry concerns in a recent analyst meet. The biggest was whether pricing pressure would reduce margins as new players enter the market. The management made it clear: that won’t happen.

Here's why — 90% of the industry comprises EPC players with thin profitability (5–6% PAT). Only two to three companies are fully backward integrated. If anyone tries to lower prices, the rest won’t survive. At the same time, demand is too large for 2–3 players to cater to alone. So, price undercutting is simply unsustainable.

The second concern was whether welfare schemes like Laadki Behen would delay payments or disrupt KUSUM execution. Oswal's answer was firm — no. Solar pumps remain a high-return investment for the government, with savings reaching nearly ₹10 lakh per pump over its lifespan. Free electricity schemes may win headlines, but they don’t replace long-term cost logic.

Finally, Oswal emphasized that payment cycles are improving. The government is aware that faster vendor payments translate to quicker execution — a win-win as it races to complete KUSUM 1 targets by FY26 and scale up for KUSUM 2.

KUSUM 2 and the Road Ahead

As of mid-2025, 7 lakh solar pumps are still pending under KUSUM 1. The government aims to complete this by FY26. Planning for KUSUM 2 is already underway, with 2 million pump installations targeted for FY27. Notably, Components B and C — which enable feeder-level solarisation — are expected to merge, creating deeper opportunities for infrastructure-led revenue streams.

Pilot projects under Component C, like the Ajmer feeder solarisation (₹150 crore, 300 pumps), are already being executed. Once validated, these models could unlock significant growth for players with on-ground presence and execution capabilities.

Who Stands to Win?

In a market of this scale, not every player will benefit equally. Caprize believes the winning combination includes:

  • Backward integration: Control over motors, controllers, and panels
  • Distribution reach: Rural presence and trusted dealer networks
  • Execution discipline: Cash-flow funded expansion, not overleveraged bets

Likely leaders in this space:

  • Shakti Pumps
  • Oswal Pumps (now trading at more reasonable valuations)
  • Australian Premium Solar
  • Sahaj Solar

These companies have either the manufacturing control, the brand equity at the farm level, or the dealer networks to scale with minimal friction.

Caprize View: A Structural Story, Not a Cyclical One

The solar pump opportunity is not a “next-quarter” story — it’s a 4–5 year megatrend driven by fiscal logic, environmental priorities, and political continuity.

From pump installation to energy resale, EV diversification to patented control tech — this space is rapidly becoming a hub of innovation and value creation.

At Caprize, we believe themes like these — rural-first, policy-backed, and margin-disciplined — deserve serious attention from long-term investors.

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