The MNRE Biomass Programme provides Central Financial Assistance (CFA) to establish biomass briquette and pellet production facilities in India. The support became especially appealing after the government raised funding for both non-torrefied and torrefied pellet facilities and later simplified several compliance standards.
However, anyone considering a new biomass pellet plant in 2026 should first comprehend the current situation. The Phase-I program ran from FY 2021-22 to FY 2025-26, and the BioUrja portal stated that the deadline for new Biomass and Waste-to-Energy applications was December 31, 2025. New applications are now suspended till further notice. Proposals submitted on or after October 10, 2024, are also subject to the availability of budget under Phase II.
As a result, an entrepreneur should not plan a project assuming that the MNRE subsidy is immediately available today. Sharda Associates assists biomass businesses in preparing project reports, calculating project costs, and reviewing the most recent subsidy status before factoring government support into financial predictions.
What Is the MNRE Biomass Subsidy?
The Biomass Programme is under the Ministry of New and Renewable Energy’s National Bioenergy Programme.
Its goal is to fund biomass briquette and pellet manufacturing units, as well as qualified non-bagasse biomass cogeneration projects. Under the plan, qualifying project developers might obtain Central Financial Assistance based primarily on installed production capacity, subject to project cost and scheme requirements.
This help is not a typical business loan. It is capital support linked to an eligible plant following the application, commissioning, inspection, and CFA-release procedures.
Self-financed projects were also allowed to seek CFA under the Phase-I framework; a bank loan was not the only way to qualify.
What Changes Have Been Made to the Biomass Subsidy?
The first significant modification occurred in July 2024, when MNRE increased the CFA, particularly for pellet manufacture.
Torrefied and non-torrefied pellets were assigned different aid rates, with torrefied pellet producers receiving a significantly higher maximum.
The second significant modification occurred on June 27, 2025, when the MNRE simplified numerous conditions.
For example, the previous requirement for a techno-economic feasibility analysis for debt-financed briquette/pellet projects has been deleted. These scheme instructions also removed the obligation to provide high-resolution site pictures during the in-principle approval stage, as well as EIA clearance as part of the CFA document list.
The prior criteria for a minimum two-year sales contract were altered so that an off-take or sales agreement could be presented without the predetermined two-year term. SCADA/remote monitoring was also eased, allowing an IoT-based monitoring solution or a project to share quarterly production data.
Performance testing was also simplified. Instead of the previous lengthier operating-period structure, complete CFA eligibility can be connected to reaching at least 80% of rated capacity during a continuous 10-hour performance test. Under the updated performance formula, production less than 80% may result in proportionate CFA, whereas output less than 50% results in no CFA.
Who Is Eligible for the MNRE Biomass Subsidy?
Under the Phase-I framework, project developers that create qualified biomass briquette or pellet manufacturing units, including self-funded enterprises, may apply.
To be eligible for the CFA, the plant needed to use modern gear and equipment.
MNRE stated that the benefit only applies to new machinery used exclusively for manufacturing pellets—torrefied or non-torrefied—rather than machines utilized for both briquettes and pellets.
Location can also influence the subsidy route. Pellet projects in Delhi, Punjab, Haryana, and certain NCR regions of Rajasthan and Uttar Pradesh may be eligible for both MNRE and CPCB support frameworks. In such circumstances, the developer is unable to claim both Central subsidies for the same plant and must select based on the applicable scheme rules.
Eligibility alone is insufficient for a fully new candidate in 2026, as fresh BioUrja applications are presently closed.
What Is the Subsidy Available for Biomass Pellets?
The revised Phase I CFA rates are
|
Type of Plant |
CFA Rate |
Maximum CFA |
|
Biomass Briquettes |
₹9 lakh per MTPH |
₹45 lakh |
|
Non-Torrefied Pellets |
₹21 lakh per MTPH |
₹1.05 crore |
|
Torrefied Pellets |
₹42 lakh per MTPH |
₹2.10 crore |
For pellet plants, the aid is also subject to the 30% plant-and-machinery cost condition, whichever results in the lowest qualifying CFA under the required computation.
A 5 MTPH non-torrefied pellet mill should not automatically include ₹1.05 crore as a guaranteed subsidy in its project report. The actual eligible CFA is determined by project cost, approved capacity, compliance, performance verification, and availability under the scheme.
What Is the MNRE Biomass Subsidy Application Process?
During the Phase I process, applications were submitted electronically via the BioUrja site. The project developer submitted the proposal for approval, and MNRE assessed it. Once accepted, a project sanction/in-principle approval process began.
Following commissioning, the developer submitted the necessary commissioning documents, and the plant underwent the statutory inspection and performance assessment. The CFA was only released once the relevant authorities accepted the necessary information and inspection results.
This phase is critical because subsidies should not be viewed as money earned instantly merely by purchasing a pellet machine. Entrepreneurs planning new projects should wait for or verify the Phase-II/new application announcement before using the MNRE CFA in financing calculations.
What Documents Are Required?
The exact checklist varies with the application stage and plant type.
Typical information for the updated process may include project and applicant details, machinery and capacity information, finance details, commissioning documentation, and CFA release assistance.
A sales or offtake agreement is required during the CFA release stage. Monitoring data from an approved IoT-based arrangement or an allowed project may also be required.
The 2025 amendment streamlined some of the prior paperwork, most notably by removing the mandatory techno-economic feasibility report and a number of other documentary requirements from the scheme checklist.
Applicants should use the most recent BioUrja checklist rather than replicating an old subsidy document list from a previous project.
What Are the Important Conditions for Claiming the Subsidy?
The biggest mistake is viewing the maximum CFA as guaranteed income.
The plant must meet the necessary technical and performance specifications.
New machinery is crucial, permitted plant capacity matters, and performance inspections might influence the ultimate quantity issued.
If the plant reaches at least 80% of rated capacity throughout the 10-hour performance test, it is entitled to 100% of the CFA. Below that level, CFA can be reduced proportionally, while performance below 50% receives no CFA under the updated model.
Applicants cannot also receive another Central Government capital subsidy for the same facility because the MNRE regulations forbid such duplication.
Most significantly, for 2026, a new investor should see the current Phase-I rates as a reference to the existing/revised scheme structure, not as assurance that a new application can now be lodged.
Conclusion
The MNRE Biomass Subsidy can considerably help qualified pellet and briquette projects, but entrepreneurs should not expect that the maximum CFA will always be available. Project costs, plant capacity, machinery, performance, compliance, and subsidy availability all have an impact on final assistance.
New applicants for 2026 should first check the most recent BioUrja/MNRE application status and Phase-II rules before integrating a subsidy in their project financing plan.
Sharda Associates assists biomass enterprises with project reports, financial projections, subsidy reports, and bank loan documentation. With over 45,500 reports provided in India, expert documentation starts at ₹2,999 with 24-48 hour delivery. Call us at 8989977769 for expert advice.
Frequently Asked Questions About
Q1. Is the MNRE biomass pellet subsidy open to new applications in 2026?
No new applications are currently being accepted. According to the BioUrja portal, new applications concluded on December 31, 2025, and no additional entries will be accepted until further notice.
Q2. How much was the subsidy for non-torrefied pellets?
The new Central Financial Assistance (CFA) is ₹21 lakh per MTPH, subject to applicable cost limitations, with a maximum CFA of ₹1.05 crore per project.
Q3: What is the subsidy for torrefied pellets?
The updated CFA rate is ₹42 lakh per MTPH, subject to applicable criteria, with a maximum CFA of ₹2.10 crore per project.
Q4. Is the subsidy based solely on machine capacity?
No. While plant capacity is crucial, the qualified CFA must also meet the required plant and machinery cost restrictions and other program conditions.
Q5: Can an existing machine claim MNRE CFA?
Generally, no. Under the applicable Phase-I framework, new equipment and machinery are required for CFA eligibility, subject to the scheme’s specific restrictions.
Q6: Is a two-year pellet sales agreement still required?
The 2025 amendment replaced the previous minimum two-year agreement requirement with the necessity to present a suitable sales or offtake agreement, subject to applicable rules.
Q7: Is SCADA required for biomass pellet plants?
In place of the previous fixed SCADA/remote-monitoring requirement, the updated standards seek specifics of an IoT-based monitoring system or an agreement to submit quarterly production data.
Q8: Can MNRE and CPCB subsidies be sought for the same pellet plant?
Double central subsidies for the same plant may be prohibited under the applicable provisions. Projects in relevant NCR locations should thoroughly review the applicable MNRE and CPCB provisions and submit the necessary undertakings when applicable.