Subsidies for Biomass Briquettes & Pellets Business

In this section of the e-book, we will explore the subsidies and fiscal incentives available for businesses involved in Biomass Briquettes and Pellets. The Government of India has recognized this sector as a Thrust Sector, offering a range of incentives to encourage green and sustainable practices.

We can broadly categorize these incentives as:

Central Government Incentives
State-Level Incentives

. New Year Special Gift .

I. Central Government Incentives

1. Tax-Free Business (Section 80JJA of Income Tax Act, 1961)

If you’re looking for a low investment, high-demand, tax-free business that is also eligible for government subsidies, then Biomass Briquettes and Pellets is a perfect choice.

To encourage eco-friendly businesses, the Government of India offers a 100% tax deduction under Section 80JJA for businesses that process biodegradable waste and generate eco-products.

Eligible Activities under Section 80JJA:

Collection and Processing of Biodegradable Waste for Power Generation
Production of Bio-fertilizers and Bio-pesticides
Generation of Biogas or Compressed Bio Gas (CBG)
Manufacturing of Pellets or Briquettes from Agri Waste
Production of Organic Manure

Duration of Tax Deduction:

100% tax exemption on profits for 5 consecutive assessment years, starting from the year your business begins operations.

Example:
If your business starts in FY 2023-24, you will enjoy tax benefits from AY 2024-25 to AY 2028-29.

2. MNRE – Central Financial Assistance (CFA) Scheme

The Ministry of New and Renewable Energy (MNRE) has launched a special Biomass Programme under its Waste-to-Energy initiative, which will remain effective until March 31, 2026.

Key Highlights:

Total Budget: ₹128 Crores
Focus Areas: Production of Biomass Briquettes and Pellets
Eligibility: New businesses or expansion projects (Proprietorship, Partnership, LLP, Pvt. Ltd., or Public Ltd.)

Subsidy Classification:

Type	CFA per Ton Capacity	Maximum Capacity	Maximum Subsidy (₹)
Non-Torrefied Pellets	₹21 Lakh/Ton	5 Tons	₹1.05 Crore or 30% of Plant & Machinery Cost (whichever is lower)
Torrefied Pellets	₹42 Lakh/Ton	5 Tons	₹2.10 Crore or 30% of Plant & Machinery Cost (whichever is lower)

Note: This revised subsidy structure is applicable from July 16, 2024.

Raw Material Requirement:

Only Agro-residues are permitted — such as crop residue, forest waste, bamboo dust, wood chips, etc.
Not Allowed: Municipal solid waste, black liquor, press mud, and processed industrial waste.

Application Process:

Must apply for Initial Project Approval (IPA) to MNRE before starting production.
Only new machinery (e.g., pellet/briquette machines, boilers, turbines) are eligible for CFA.

II. State-Level Incentives – Uttar Pradesh

The Uttar Pradesh Micro, Small and Medium Enterprises Promotion Policy – 2022 provides a variety of capital subsidies and fiscal incentives.

1. Capital Subsidy:

Depending on the area and unit size, capital subsidy is available as follows:

Region	Micro Units	Small Units	Medium Units
Bundelkhand & Purvanchal	25%	20%	20%
Madhyanchal & Paschimanchal	20%	15%	15%
Gautam Buddha Nagar & Ghaziabad	15%	10%	10%

Subsidy Ceiling: ₹4 Crore per unit
Disbursement:
- 1st Installment: After building construction completion
- 2nd Installment: After commencement of 50% commercial production
Interest Subsidy for Micro Units: 50% of loan interest (max ₹25 lakh over 5 years)

2. Stamp Duty Exemption:

Region	Stamp Duty Refund
Purvanchal & Bundelkhand	100%
Madhyanchal & Paschimanchal	75%
Gautam Buddha Nagar & Ghaziabad	50%

Women Entrepreneurs: Eligible for 100% exemption in any region

3. Other Fiscal Incentives:

Green Audit & Equipment Reimbursement:
- 75% of audit fees (max ₹50,000)
- 50% of recommended equipment cost (max ₹20 lakh)
Patent/Trademark Registration:
- 75% reimbursement of documentation cost (max ₹10 lakh)
Waste Recycling Support:
- 50% assistance (max ₹75 lakh) for equipment used in 50%+ recycling with zero liquid discharge

Conclusion :

These central and state-level incentives make Biomass Briquettes and Pellets an extremely lucrative and eco-friendly business model. With high demand, tax exemptions, capital support, and sustainability at its core, this is the right time to step into the green business revolution.

Reach Us

Call Us : 8683898080

E-mail Us : sales@kipfinancial.com

KIP Financial Consultancy Pvt. Ltd.

DSB – 38, Red Square Market, Hisar – 125001 (HR)