Biomass Briquettes Business in India: Tax-Free Profits & Subsidies

The Biomass Briquettes and Pellets industry is emerging as one of India’s most profitable and environmentally significant businesses. With soaring demand, substantial government incentives, and a 100% tax-free status under Section 80JJA, this sector represents a compelling opportunity for entrepreneurs and investors alike.

This guide provides a detailed overview of the business potential, financial incentives, and strategies to maximize government grants while reducing project costs.

Introduction

The scheme focuses on promoting renewable energy by converting agricultural residue and biodegradable waste into high-quality biomass briquettes and pellets. These products serve as eco-friendly alternatives to coal, reducing pollution and providing a sustainable energy source for industrial and domestic use.

Key highlights:

Green Energy Project: Converts waste to energy
Mandatory Usage: Thermal power plants and industries are required to co-fire biomass with coal
High Market Demand: Current demand far exceeds supply, creating substantial business opportunities

Eligible Under the Scheme

The scheme is applicable for projects that:

Manufacture briquettes or pellets from agricultural residues, forest waste, bamboo, wood dust, or horticultural waste
Operate as a renewable energy and waste-to-energy project
Avoid using industrial processed waste, municipal solid waste, or black liquor (these are not eligible for MNRE CFA)

Eligible projects can apply for:

MNRE Capital Financial Assistance (CFA)
Section 80JJA Income Tax Exemption
Agri Infra Fund (AIF) Interest Subsidy
State-level subsidies and benefits

Who Can Apply for the Scheme?

Entrepreneurs or companies willing to establish biomass briquettes or pellets manufacturing units
MSMEs and larger industrial units planning eco-friendly energy solutions
Project developers eligible under MNRE, PMEGP, and state incentive schemes

Financial Benefits

100% Tax-Free: Profits eligible for 5-year income tax deduction under Section 80JJA
MNRE Capital Subsidy:
- Torrefied Pellets: Up to ₹2.10 Cr
- Non-Torrefied Pellets: Up to ₹1.05 Cr
- Briquette Manufacturing: Up to ₹45 Lakhs
AIF Interest Subsidy: 3% per annum on loans up to ₹2 Cr for 7 years
High Returns: Subsidies and incentives can reach up to 5X of investment
State-Level Benefits: Stamp Duty, Electricity Duty, and GST refunds
PMEGP for Small Projects: Up to 35% subsidy

How KIP Can Help You

Subsidy Viability Report (SVR):
Get a customized report outlining all applicable central and state subsidies—including MNRE, AIF, and PMEGP benefits—specific to your biomass project.
Business Modeling:
KIP helps structure your biomass venture to maximize profits and qualify for 100% tax deductions and capital subsidies.
Bank Financing Assistance:
Receive expert support in loan documentation and coordination with subsidy-linked financing to secure funds at lower interest rates.
Subsidy Filing & Processing:
From application to approval, KIP ensures smooth handling of your subsidy claims under government programs like MNRE and Agri Infra Fund.

Frequently Asked Questions (FAQs)

Q1: What is the MNRE subsidy for biomass projects?

Torrefied Pellets: Up to ₹2.10 Cr
Non-Torrefied Pellets: Up to ₹1.05 Cr
Briquette Manufacturing: Up to ₹45 Lakhs

Q2: Is the business tax-free?

Yes, 100% income tax exemption under Section 80JJA for 5 consecutive assessment years.

Q3: Can I get an interest subsidy on loans?

Yes, 3% annual interest subvention via Agri Infra Fund (AIF) on loans up to ₹2 Cr for 7 years.

Q4: Do state governments provide additional benefits?

Yes, benefits include Stamp Duty, Electricity Duty, GST refunds, capital subsidies, and employment grants.

Q5: Who can apply for these subsidies?

Entrepreneurs, MSMEs, and companies establishing biomass briquettes/pellets units eligible under MNRE, PMEGP, or state schemes.

Q6: Where can I get professional guidance for AIF?

KIP provides end-to-end assistance, from project report preparation to bank coordination, helping you maximize AIF benefits and secure funding.