Biomass Energy in India: A Profitable and Tax-Free Opportunity

India is on a mission to balance economic growth with sustainability, and the biomass energy sector is emerging as one of the most rewarding opportunities for investors, entrepreneurs, and farmers alike. Among its most promising avenues are biomass briquettes and pellets, which are not only eco-friendly but also backed by strong government support, tax exemptions, and subsidies.

This sector is officially recognized as a “Thrust Sector” by the Government of India, making it a high-potential area for business development. For those looking at profitable, tax-free ventures, biomass energy truly is India’s Green Gold Mine.

Why Invest in Biomass Briquettes & Pellets?

1. Eco-Friendly Coal Alternative

Biomass briquettes and pellets serve as a clean and cost-effective substitute for coal.

Lower Ash Content: 6–10% compared to coal’s 15–30%
Reduced Pollution: Significant drop in emissions
Lower Costs: Affordable for industries and power plants
Applications: Used in thermal power plants (co-firing with coal), textile mills, paper mills, and food processing units

2. Surging Demand & Policy Push

The demand-supply gap is massive. India requires about 95,000 tons per day, while production is only 8,000–10,000 tons per day.

Government mandates are fueling this demand:

Coal-based power plants must now co-fire at least 5% biomass pellets or briquettes.
Several industries are adopting biomass as part of their clean energy transition.

3. Waste-to-Wealth Model

This business directly supports the government’s Waste-to-Wealth Initiative by converting agricultural and forest residues into usable energy.

Accepted raw materials include:

Crop residue
Forest residue
Horticulture residue
Bamboo and wooden residues

Unlocking Financial Benefits: Government Incentives

Biomass entrepreneurs enjoy some of the most attractive incentives in India’s renewable energy space.

⦿ Tax Benefits

100% Tax-Free Profits under Section 80JJA
Deduction valid for 5 consecutive assessment years from the start of operations

⦿ Capital Subsidies (MNRE – Ministry of New & Renewable Energy)

Briquettes: ₹9 lakh per ton/hour (up to ₹45 lakh per project)
Non-torrefied pellets: ₹21 lakh per ton/hour (up to ₹1.05 crore per project)
Torrefied pellets: ₹42 lakh per ton/hour (up to ₹2.10 crore per project)

(Amendments effective July 16, 2024, with In-Principle Approval required before production)

⦿ Financing Support

Agri Infra Fund: 3% interest subvention on loans up to ₹2 crore (for 7 years)
Credit Guarantee (CGTMSE): Government covers guarantee fee on loans up to ₹2 crore
PMEGP Scheme: Capital subsidy of up to 35% for projects up to ₹50 lakh

⦿ State-Level Perks

Many states add further benefits such as:

Stamp duty refunds
Exemptions from electricity duty
Land conversion fee waivers
State GST refunds
Employment-linked incentives

Is This Business for You?

Biomass briquettes & pellets business is ideal for:

Entrepreneurs seeking high-demand, tax-free, and subsidy-backed opportunities
Farmers wanting to monetize agricultural waste
Investors (including NRIs) looking for high-ROI projects in India
Existing businesses in energy or waste management diversifying their portfolio
Industries searching for cost-effective coal alternatives

How KIP Can Help You

KIP has been a trusted subsidy and business consultant for bio-energy projects, with expertise in turning opportunities into thriving businesses. Their step-by-step approach ensures entrepreneurs and investors maximize both profitability and government benefits.

Here’s what KIP brings to the table:

Business & Subsidy Updates – Timely alerts on schemes, policy changes, and new opportunities.
Subsidy Viability Report (SVR) – Customized analysis of all eligible subsidies and incentives.
Business Modeling & Registrations – Assistance with MSME, GST, IEC, Startup India, etc.
Detailed Project Report (DPR) – Professionally prepared DPRs for bank financing and subsidy approvals.
Bank Financing Assistance – Loan documentation and processing to secure funds at lower interest rates.
Subsidy Filing & Processing – End-to-end execution for MNRE, AIF, PMEGP, and other schemes.
Compliance & Claim Management – Ensuring smooth flow of ongoing benefits like SGST refunds and interest subsidies.
Tender Assistance – Updates and support in winning government tenders.

Frequently Asked Questions (FAQs)

Q1: What are biomass briquettes and pellets?

They are compressed forms of agricultural, forest, bamboo, or wooden residues, used as eco-friendly substitutes for coal.

Q2: Why are they a good alternative to coal?

They are less expensive, easier to handle, produce significantly lower pollution, and have lower ash content compared to coal, making them a cost-effective and environmentally superior option.

Q3: What raw materials are eligible?

Crop residue, bamboo, forest residue, wooden chips, and dust. (Municipal solid waste is excluded from certain schemes).

Q4: Are the government subsidies significant?

Yes, government subsidies are substantial. For instance, Central Financial Assistance (CFA) from MNRE can go up to ₹2.10 crore for torrefied pellets, in addition to interest subsidies, tax exemptions, and state-level benefits.

Q5: How long do the tax benefits last?

Businesses engaged in qualifying activities can claim a 100% tax deduction on profits for five consecutive assessment years from the commencement of operations.