Biomass Pellet and Briquette Plant Subsidy in India: 2026 Status

Last updated: 1 November 2026 · By KSR Green Bharat Team

Key takeaways

• Phase I of the National Bioenergy Programme covered 1 April 2021 to 31 March 2026.
• New proposals are waiting on Phase II budget approval – check BioURJA for the latest notice.
• CFA was performance-based: full release needed 80% of rated capacity over a 10-hour inspection.
• Only new plant and machinery qualified, and minimum plant size was 1 MTPH.
• Rajasthan’s Biomass and Waste to Energy Policy, 2023 adds state-level facilitation.

What is MNRE’s Biomass Programme?

The Biomass Programme is one of three sub-schemes of the Ministry of New and Renewable Energy’s National Bioenergy Programme, alongside the Waste to Energy and Biogas programmes. Its objective is to support biomass briquette and pellet manufacturing plants and biomass (non-bagasse) cogeneration projects in industry. Applications are handled through the BioURJA portal, and self-funded projects were also eligible for CFA.

How much CFA was available for pellet and briquette plants?

The pellet rates come from MNRE’s revision of 16 July 2024, which for the first time distinguished non-torrefied and torrefied pellets. The briquette rate was unchanged. These rates applied to projects under Phase I of the Biomass Programme.

Is the subsidy open for new applications now?

The BioURJA portal lists the programme’s validity as 1 April 2021 to 31 March 2026 and states that proposals for briquette, pellet (torrefied and non-torrefied) and non-bagasse cogeneration plants received on or after 10 October 2024 would be considered after approval of the budget under Phase II of the National Bioenergy Programme. MNRE’s programme highlights also listed 31 December 2025 as the last date for applications under the Phase I guidelines.

What this means for you: build your financial model on bank finance and equity, keep your documentation ready, and watch the BioURJA portal for a Phase II notification. Do not commission or order machinery on the assumption that Phase I terms will apply.

How was CFA released – on capacity or on performance?

MNRE’s revised Biomass Programme guidelines of June 2025 made release performance-based and simplified documentation (for example, techno-economic feasibility reports and EIA clearance documents were no longer required for briquette and pellet plants). The key performance rule:

Inspections were carried out by the State Nodal Agency for renewable energy or the Sardar Swaran Singh National Institute of Bio-Energy (SSS-NIBE). Commissioning was expected within 12 months of in-principle approval for briquette and pellet plants.

Even if Phase II changes the numbers, the lesson is clear: a plant that cannot hold its rated output on real feedstock loses money twice, through lower sales and lower support. Our pellet mill troubleshooting guide covers the usual causes of low output.

Other eligibility conditions under Phase I

• Only plants installed with new equipment and machinery were eligible.
• Minimum plant size was 1 MTPH for briquette and pellet plants.
• Applicants taking MNRE CFA could not claim a capital subsidy for the same plant from another ministry or department.
• In regions where the CPCB’s pelletisation scheme applied, developers had to choose one scheme and give a notarised undertaking.

What about the CPCB pelletisation scheme?

The Central Pollution Control Board has run a separate one-time financial support scheme for pellet manufacturing aimed at reducing stubble burning in the NCR and adjoining states. Eligibility, regions and amounts have been revised over time, so check the current CPCB notification for your district. You cannot combine it with MNRE CFA for the same plant.

What support does Rajasthan offer?

The Government of Rajasthan notified the Rajasthan Biomass and Waste to Energy Policy, 2023 on 29 September 2023. The policy promotes biomass-based power projects as well as briquette and pellet manufacturing units, provides for land allotment processes for biomass power projects through the Rajasthan Renewable Energy Corporation (RREC), and states that no registration charges apply for registering briquette and pellet manufacturing units. Rajasthan has also referenced biomass promotion under its Integrated Clean Energy Policy, 2024. Confirm the current benefits and procedures with RREC before applying.

How should you plan funding in 2026?

1. Prepare a bankable project report using your own machinery quotations, feedstock prices and a buyer’s specification.
2. Explore MSME bank finance and priority-sector lending routes with your bank.
3. Register on BioURJA and keep documents ready so you can apply quickly when Phase II opens.
4. Check state-level incentives through RREC (Rajasthan) or your state’s nodal agency.
5. Size the plant to be viable at your realistic utilisation, without subsidy.

Talk to KSR Green Bharat

KSR Green Bharat helps developers plan pellet and briquette plants around feedstock, equipment, layout and operating realities, so the plant can perform during inspection and long after. For the full technical picture, read our biomass pellet plant setup guide, then share your project details with our team.

Note: Scheme details change. This article reflects information published up to November 2026. Always verify current terms on the official portals before making financial decisions.

Frequently asked questions

Is the MNRE subsidy for biomass pellet plants still open in 2026?

Phase I of MNRE’s Biomass Programme was valid from 1 April 2021 to 31 March 2026. The BioURJA portal states that proposals received on or after 10 October 2024 will be considered after budget approval for Phase II of the National Bioenergy Programme. Check the portal for the latest notice before relying on the subsidy in your financial model.

How much CFA did MNRE give for a non-torrefied pellet plant?

Under the July 2024 revision, non-torrefied pellet plants were eligible for Rs 21 lakh per MTPH of capacity, capped at Rs 105 lakh per project, or 30 percent of the capital cost of plant and machinery for a 1 MTPH plant, whichever is lower.

What was the CFA for briquette plants?

Briquette manufacturing plants remained at Rs 9 lakh per MTPH of capacity, with a maximum of Rs 45 lakh per project.

Is CFA paid on installed capacity or on actual output?

Release was performance-based. Under the June 2025 revised guidelines, a plant had to run at an average of 80 percent of rated capacity over 10 continuous hours during inspection to receive 100 percent of eligible CFA. Lower utilisation reduced the amount pro-rata, and below 50 percent no CFA was released.

Does Rajasthan offer its own support for biomass pellet units?

Rajasthan notified the Rajasthan Biomass and Waste to Energy Policy, 2023, which promotes briquette and pellet manufacturing and states that no registration charges apply to briquette and pellet manufacturing unit registration under the policy. Confirm current benefits with the Rajasthan Renewable Energy Corporation (RREC).

Sources

• MNRE BioURJA – About the programme
• MNRE BioURJA – Scheme highlights
• MNRE revised Biomass Programme guidelines (June 2025, PDF)
• Rajasthan Biomass and Waste to Energy Policy, 2023 (PDF)
• Energetica India – Revised CFA for pellet plants