The most wide spread thermal use of solar energy, so far, has been for water heating. Solar water heating systems have been commercialized in many counties in the world. Though the technical feasibility of domestic solar water heating systems (DSWHS) has long been established, their financial viability needs to be carefully examined, particularly in tropical countries with relatively lower annual capacity utilization and poor purchasing power of potential users. The potential number of Indian households who can invest in DSWHS have been estimated based on the income distribution in the country, the capital cost of solar water heating systems, interest rate charged on the loan provided for the purchase of DSWHS etc. Using the seasonal and diurnal variation of ambient temperatures at many locations in the country, the periods with annual hot water requirement have been identified. A simple framework for financial evaluation of DSWHS has also been presented. The results of some typical exemplifying calculations have been presented and discussed. (C) 2003 Elsevier Ltd. All rights reserved.