Government Subsidies and Policies for Biomass Energy Projects in India (2025 Update)
FABON Engineering | www.fabon.in
🌱 Introduction: Biomass in India’s Green Energy Future
India’s commitment to transitioning towards sustainable and renewable energy sources is stronger than ever in 2025. Among various alternatives, biomass energy—derived from organic agricultural and industrial waste—has emerged as a key player in India’s green energy strategy.
To accelerate this shift, the Government of India, primarily through the Ministry of New and Renewable Energy (MNRE), has introduced several subsidies, schemes, and policies to support biomass energy projects, particularly in the biomass briquette and biomass pellet manufacturing sector.
⚖️ National Policies Supporting Biomass Energy in 2025
1. National Bio-Energy Mission (NBEM)
The flagship initiative, launched by MNRE, aims to promote:
- Biomass power generation
- Biomass co-generation in sugar mills
- Biomass briquette and pellet adoption
- Improved fuel efficiency for industrial heating
2. Waste to Energy Programme (WTEP)
Focused on converting agro-industrial waste into energy, it includes:
- Capital subsidy for biomass pellet plants
- Financial support for compressed biogas (CBG) projects
- Incentives for hybrid systems using biomass + solar
3. Renewable Energy Investment Promotion Policy (REIPP)
This policy supports:
- 100% FDI in biomass sector
- Reduced GST on biomass equipment (5%-12%)
- Infrastructure support for biomass clusters
💰 Government Subsidies for Biomass Projects
1. Capital Subsidy for Biomass Briquette & Pellet Plants
- Up to ₹45 lakh/MW for biomass projects
- ₹2.5 lakh/ton per day capacity for biomass pellet units
- Subsidy ceiling: ₹1.5 crore per project
- Applies to new setups and technology upgrades
2. Subsidy for Biomass-Based Power Generation
- ₹25 lakh per MW (based on efficiency benchmarks)
- ₹1 crore for captive biomass plants in MSMEs
3. Viability Gap Funding (VGF)
- Up to 20% of project cost for public-private biomass ventures
- Encourages rural-based thermal energy and decentralized grids
4. State-Wise Subsidies
Different states offer additional perks:
- Maharashtra & Punjab: Tariff-based incentives for co-generation
- Tamil Nadu & Karnataka: Subsidized electricity duty, easy grid access
- UP & Bihar: Land grants and priority clearances for pellet projects
📈 Fiscal and Tax Incentives (2025)
- Accelerated Depreciation: 40% under Income Tax Act for biomass machinery
- GST Benefits: 5% on biomass briquette & pellet machines
- Carbon Credit Eligibility: Earn CERs (Certified Emission Reductions) under Clean Development Mechanism (CDM)
🏭 Who Can Avail These Subsidies?
- Biomass fuel manufacturers (briquette & pellet plants)
- Industries replacing coal with biomass in boilers
- Rural entrepreneurs setting up biomass dryers or shredders
- Agricultural cooperatives and Farmer Producer Organizations (FPOs)
- EPC contractors in the renewable energy sector
📌 How to Apply for Biomass Subsidies in India
- Visit MNRE Portal: https://mnre.gov.in
- Prepare DPR (Detailed Project Report) with ROI and carbon savings
- Register with state renewable energy agency (e.g., MEDA, PEDA, GEDA)
- Submit application online under WTEP or NBEM
- Track subsidy disbursal through MNRE online dashboard
🌍 Impact of These Policies on India’s Energy Transition
With these robust policies in place, the Government of India expects:
- 10 GW of biomass capacity addition by 2030
- Replacement of 20 million tons of coal in industrial heating
- Generation of green employment in rural sectors
- Reduction in agricultural waste burning
🔧 FABON’s Role in Supporting the Biomass Ecosystem
At FABON Engineering, we provide end-to-end solutions for:
- Biomass Pellet Making Machines
- Biomass Briquette Plants
- Rotary and Flash Dryers
- Sawdust Making & Hammer Mills
Our machines are subsidy-compliant, energy-efficient, and engineered for long-term industrial use. Visit www.fabon.in for more info.