New Delhi: The Madhya Pradesh government has introduced a new policy aimed at turning agricultural waste and forest biomass into a major clean energy resource. The policy offers capital subsidies of up to ₹200 crore to attract investment in compressed biogas (CBG), biodiesel, and other advanced biofuel projects, reports The Economic Times.
Announced under the Madhya Pradesh Renewable Energy Policy 2025, the plan includes setting up one biofuel plant in every development block. The goal is to build stronger clean energy supply chains, reduce rural waste, and provide new income sources for farmers and biomass collectors.
The policy, rolled out by the state’s New and Renewable Energy Department, introduces a dedicated investment promotion scheme. It covers fuels like CBG, biodiesel, and bio-coal, but excludes first-generation ethanol. Projects must begin commercial production after the policy’s start date and register with the department to receive benefits.
Under the Basic Investment Promotion Assistance (BIPA) scheme, qualifying projects will receive financial support in seven yearly instalments, up to ₹200 crore. Additional funds of ₹5 crore are available for building roads, water pipelines, and electricity connections. Plants that include zero liquid discharge (ZLD) systems for waste handling can receive an extra ₹10 crore.
Only one plant per development block will be allowed. If multiple investors apply, a district committee led by the Collector will select the best proposal based on land, technology, and financial readiness.
To support plant setup, the state will offer government revenue land at 50% of the circle rate and forest/agricultural land for biomass at just 10% of the annual guideline rate. For a 10-tonne per day CBG plant, at least 10 acres are required. Similar land rules are outlined for biodiesel and bio-coal units. Land allotments will last 30 years and can be renewed later.
Other incentives include a 10-year waiver on electricity duty and energy development cess. There’s also a 50% stamp duty refund on private land purchases and exemptions from certain surcharges for supplying power to third parties, subject to regulatory approval.
The Agriculture Department will appoint a biomass aggregator for each development block, who can be a farmer-producer group, co-operative, or private entity. These aggregators will manage supply to the plants and can access working capital from NABARD and cooperative banks. Departments for urban development, animal husbandry, and forestry will also contribute to supplying organic waste, dung, and fuelwood.
For equipment like balers and cutters used in biomass collection, the policy provides up to ₹20 lakh in capital subsidy per set, with 30% support from the state and 50% from the central government’s SMAM scheme.
Biofuel plants must sell the bio-manure by-product through registered fertiliser dealers. An online platform will monitor feedstock supply and project progress while connecting developers, farmers, and aggregators.
Environmental clearance from the Pollution Control Board is mandatory, and all fuels produced must meet the standards set by the Bureau of Indian Standards (BIS). Larger projects with investments above ₹500 crore may receive customised incentives upon review by the Cabinet Committee on Investment Promotion.
