Maximize Subsidies in Punjab Biomass Briquettes & Pellets

The Biomass Briquettes and Pellets business is a highly sought-after, 100% tax-free sector. It focuses on producing eco-friendly fuel by converting agricultural, forest, horticultural, wooden, or bamboo residues into compressed biomass products. Serving as excellent substitutes for coal in both industrial and domestic applications, these briquettes and pellets produce lower ash content and reduced pollution, making them a key contributor to green energy initiatives. Recognized as a Thrust Sector by both the Government of India and state governments like Punjab, this industry operates as a Waste-to-Energy project with immense growth potential.

Introduction: Biomass Subsidy Viability Report Punjab

For entrepreneurs looking to start or expand a business, the biomass briquettes and pellets sector offers huge opportunities. India produces only 8,000–10,000 tons per day, while the demand is nearly 95,000 tons.

This demand is backed by law: the Ministry of Environment requires coal-based power plants to use at least 5% crop residue-based pellets or briquettes with coal. This creates strong demand across India, especially in industrial states like Punjab, which has major power plants and industries such as TSPL Vedanta, NABHA Power Plant, paper mills, textile mills, food processing, and chemical factories.

Who Can Benefit?

This Subsidy Viability Report (SvR), tailored for Punjab, is valuable for:

Entrepreneurs looking to start a new biomass business.
Farmers or agri-businesses seeking to manage agricultural residue while generating extra income.
Investors interested in high-demand, high-subsidy, or tax-free ventures.
Non-Resident Indians (NRIs) planning to invest in India.
Entities aiming for large supply contracts with public sector undertakings (e.g., NTPC, Adani Power, TSPL Vedanta Punjab).
Business seekers in Punjab, Haryana, and Uttar Pradesh.
Professionals involved in waste residue management or acting as biomass aggregators.
Organizations such as Farmer Producer Companies, Self Help Groups, or Private Limited Companies.

General Compliance and Eligibility Criteria

A. Tax Exemption (Section 80JJA)

Production of briquettes or pellets from agricultural or biodegradable waste qualifies for 100% tax deduction on profits for five consecutive assessment years.

B. MNRE Central Financial Assistance (CFA) Scheme

Eligibility: Applies to new or expanding units, including proprietors, partnerships, LLPs, private limited, or public limited companies.
Raw Materials: Only agri-residue such as crop residue, forest residues, horticulture residues, bamboo, or wooden chips is eligible. Municipal waste or industrial by-products are not eligible.
Application Process: Requires In-Principle Approval (IPA) from the Ministry of Renewable Energy before production begins.
Timeframe: Projects must be commissioned within 12 months of IPA.
Funding: Applicable for self-funded or bank-financed projects.
Subsidy Stacking Restriction: Only one central government capital subsidy can be availed per unit.

C. Punjab Thrust Sector Classification
Processing agro-waste into energy, bio-energy, or manure is classified as a Thrust Sector under the Punjab Industrial and Business Development Policy 2022, providing higher incentives than standard MSME units.

Financial Criteria and Subsidies

Central Government Schemes

MNRE CFA (Torrefied Pellets)
- Maximum Subsidy: ₹2.10 Cr
- Rate: ₹42 Lakh per TPH (max 5 TPH) or 30% of Plant & Machinery cost, whichever is lower
MNRE CFA (Non-Torrefied Pellets)
- Maximum Subsidy: ₹1.05 Cr
- Rate: ₹21 Lakh per TPH (max 5 TPH) or 30% of Plant & Machinery cost, whichever is lower
MNRE CFA (Briquettes)
- Maximum Subsidy: ₹45 Lakh
- Rate: ₹9 Lakh per TPH (max 5 TPH)
Agri Infra Fund (AIF) – Interest Subsidy
- Rate: 3% per year for 7 years
- Applicable on bank term loans up to ₹2 Cr
Agri Infra Fund (AIF) – Credit Guarantee
- Benefit: 100% refund of CGTMSE cover fee
- Applicable for loans up to ₹2 Cr, paid by government for 7 years
PMEGP Scheme (Small Projects up to ₹50 Lakh)
- Maximum Subsidy: ₹17.5 Lakh
- Capital Subsidy: Up to 35%

Punjab State Thrust Sector Incentives

Investment Subsidy (SGST Reimbursement): 100% of net SGST on intra-state sales for 10 years, capped at 125% of Fixed Capital Investment (FCI)
Electricity Duty Exemption: 100% for 10 years
Stamp Duty Exemption: 100% exemption on purchase or lease of land/building
Exemption from CLU/EDC and Property Tax: 100% for 10 years

How KIP Can Help You

Subsidy Viability Report (SVR): Tailored listing of all eligible subsidies and incentives for your project.
Business Modelling: Selecting the best model for maximum incentives, including MSME/HUM/IEC/GST/Startup registrations.
Detailed Project Report (DPR): Comprehensive reports for bank financing and subsidy applications.
Bank Financing Assistance: Lower interest loans by syncing with subsidies.
Subsidy Application Support: Handling AIF, MNRE, CPCB, and PMEGP approvals.
Compliance Monitoring: Ensuring timely receipt of interest subsidy, SGST refunds, and electricity duty exemptions.
Tender Assistance: Updates and support for filling tenders in the biomass sector.

Frequently Asked Questions (FAQs)

Q1: What is this business?

Converting agri, forest, or horticulture residues into biomass fuel to replace coal.

Q2: Why profitable in Punjab?

High industrial demand, power plants, incentives, and legal 5% biomass mandate.

Q3: Available subsidies?

Central schemes: MNRE CFA, AIF, PMEGP; Punjab incentives: SGST, electricity duty, stamp duty exemptions.

Q4: Is it tax-free?

Yes, under Section 80JJA, profits from biomass briquettes and pellets production are 100% tax-exempt for five consecutive years.

Q5: Who can invest in this business?

Entrepreneurs, farmers, NRIs, waste aggregators, and entities like Farmer Producer Companies, Self Help Groups, or private limited companies can invest.

Q6: How much subsidy can a standard plant in Punjab receive?

For example, a 2 TPH biomass pellets plant can receive up to approximately ₹2.88 crore in combined central and state incentives over 7 years.