Revised Rate of Subsidy for Biomass Briquettes & Pellets: A Golden Opportunity for Green Entrepreneurs
The Ministry of New and Renewable Energy has recently updated the rates for Central Financial Assistance (CFA) under the Biomass Programme. This revision aims to support the manufacturing of biomass pellets, which are a key component in sustainable energy production. The updated rates provide more financial support to businesses involved in producing biomass pellets, making it easier for them to invest in and expand their operations.
Revised rate of subsidy for Biomass Briquettes and pellets with effect from 16th July 2024.
The rate of CFA for pellet manufacturing plants stands revised and the scheme guidelines may be read as under
What’s New in the Subsidy Policy?
The Ministry of New and Renewable Energy (MNRE) recently announced revised subsidy rates for setting up biomass briquettes and pellets manufacturing units. The objective is clear—reduce dependency on coal, cut down emissions, and encourage the use of agricultural residue.
Now, eligible entrepreneurs can get capital subsidies up to 35%–50% on plant and machinery, with additional benefits in certain states or backward regions. But to avail these benefits, your business must be registered under Udyam registration and backed by a solid Detailed Project Report for Bank Loan that includes financial projections and operational details.
1 Briquette Manufacturing Plant :
The Ministry has made some amendments. Under the new amendment, the subsidy for biomass briquettes will remain the same: ₹9 lakh per ton of production capacity, with a maximum capacity of up to 5 tons per hour, which means a maximum benefit of ₹45 lakh for Biomass Briquettes.
2 Non Torrified Pellet Manufacturing Plant :
- The Financial Assistance provided by the Government has increased from ₹9 lakh to ₹21 lakh per ton of production capacity.
- The maximum production capacity is up to 5 tons. Therefore, if you receive ₹21 lakh per ton, then for 5 tons, the maximum subsidy amount would be ₹1 crore 5 lakh.
- The maximum subsidy will be either ₹1 crore 5 lakh or 30% of the cost of your plant and machinery, whichever is lower. An important aspect to note is that you will receive the subsidy based on the lower of these two amounts.
3 Torrefied Pellet Manufacturing Plant :
The Subsidy amount has increased from ₹21 lakh to ₹42 lakh per ton of production capacity. This means that for a maximum capacity of 5 tons, the maximum subsidy benefit for torrefied biomass pellets is ₹2 crore 10 lakh. The same concept applies here you will receive the subsidy based on the lower of either 30% of the cost of your plant and machinery or the ₹42 lakh per ton production capacity.
| Sr No | Type of Project | Rates of CFA under Biomass programme of NBP (for all states and UTs) |
| 1 | Briquette manufacturing plant | Rs. 9.0 lakhs/MTPH (Maximum Rs. 45.0 lakhs per project) |
| 2 | Non Torrefied Pellet manufacturing plant | Rs. 21.0 lakhs/MTPH production capacity or 30% of the capital cost considered for plant and machinery of 1 MTPH plant, whichever is lower (Maximum Rs. 105 lakhs per project) |
| 3 | Torrefied Pellet manufacturing plant | Rs. 42.0 lakhs/MTPH production capacity or 30% of the capital cost considered for plant and machinery of 1 MTPH plant, whichever is lower (Maximum Rs. 210 lakhs per project) |
Difference B/W Torrified and Non Torrified Pellets :
There is a significant logic behind this differentiation, as it is based on technology.
1 The torrefaction process results in pellets with high energy density. This is because, during the process, which occurs at temperatures between 300 and 350 degrees Celsius, the moisture content inside the pellets is almost eliminated due to compression.
In contrast, non-torrefied pellets typically retain a moisture content of approximately 10% to 14%.
2 The high compactness of torrefied pellets means that storage and transportation losses are significantly reduced. Their low moisture content minimizes the potential for biodegradation, extending their usability over a longer period.
In contrast, non-torrefied pellets, with their higher moisture content, have a greater chance of biodegradation and are more susceptible to temperature and water impact.
3 Torrefied pellets generate high power, but the cost of plant and technology is higher compared to non-torrefied pellets.
- The equipment required for high-temperature and high-compression processes in torrefaction increases the overall plant cost. That’s why the Ministry of Renewable Energy has provided higher subsidies for torrefied pellets to offset these additional costs.
- Compared to non-torrefied pellets, torrefied pellets receive a higher subsidy. For non-torrefied pellets, you receive ₹21 lakh, while for torrefied pellets, the subsidy is ₹42 lakh per ton of production capacity. Currently, power plants in our country are inviting tenders for non-torrefied pellets because they utilize agro residues more effectively. That’s why the demand is higher for non-torrefied pellets.
PMEGP Project Report: Access Central Subsidy
For new micro-enterprises, especially in rural and semi-urban areas, the Prime Minister’s Employment Generation Programme (PMEGP) continues to be a powerful tool. With the revised guidelines, biomass-based industries like briquettes and pellet plants are eligible for higher subsidies. But your application must include a comprehensive PMEGP Project Report showing not only the cost of machinery and operations but also employment generation potential and income forecast.
Keep in mind—whatever income you show in your PMEGP DPR must align with your income tax return filing. Mismatches can result in subsidy rejections or delays.
CMEGP Project Report: For State-Level Subsidies
In states like Maharashtra, the Chief Minister’s Employment Generation Programme (CMEGP) offers additional incentives for green businesses. The revised policy supports briquette units with funding and interest subsidy. But again, a detailed CMEGP Project Report is mandatory.
The project report must clearly mention your capital requirement, sales projections, break-even analysis, and expected profitability—all of which should reflect later in your income tax return filing for consistency.
Mudra Loan Project Report: Start Small, Grow Big
For small-scale units, the Pradhan Mantri Mudra Yojana offers collateral-free loans up to ₹10 lakh. If you’re starting a modest briquettes unit, you can apply under this scheme with a tailored Mudra Loan Project Report. The report must outline your working capital needs, operational model, and payback plan.
Don’t forget—your Mudra Loan Project Report, financial books, and ITR filing should tell the same story. Uniformity helps you build credibility and avoid compliance issues.
Why Feasibility Project Report Matters
Before you dive into machinery and site setup, a Feasibility Project Report helps you evaluate market demand, raw material availability, logistics, and profitability. This pre-investment analysis is not just helpful for your understanding but also strengthens your Project Report for Bank Loan and applications for subsidies or grants.
Udyam Registration: A Must for Every MSME
Whether you apply for PMEGP, CMEGP, or Mudra, your business must be registered under Udyam Registration. This registration certifies your enterprise as a micro, small, or medium entity and makes you eligible for schemes, tenders, and financial support. The investment and turnover declared during registration should be supported by your Detailed Project Report and later validated in your income tax return filing.
Apply for Udyam Registration early in your business journey to unlock these benefits.
Final Thoughts
The revised subsidy rates for biomass briquettes and pellets are a game-changer for green entrepreneurs. Whether you’re a first-time business owner or looking to scale an existing setup, proper documentation is your strongest ally.
Start with a clear Project Report for Bank Loan, backed by a thorough Feasibility Project Report, and ensure your business is properly listed under Udyam Registration. Your PMEGP Project Report, CMEGP Project Report, or Mudra Loan Project Report should all align with your real-world operations and income tax return filing records.
