MNRE Biomass Pellet Subsidy 2026 — ₹21 Lakh per TPH CFA Rules & Application

Since the rule mandating 5–10% biomass co-firing in coal-fired thermal power plants came into force, biomass pellets have become one of India’s fastest-growing industrial segments. To hold the supply line, the Ministry of New and Renewable Energy (MNRE) is offering a capital subsidy (CFA) for setting up pellet plants under the biomass component of its National Bioenergy Programme — the biggest financial incentive to enter this sector. This guide brings together the exact subsidy math, eligibility, the steps of applying on the BioURJA portal, and the mistakes that get applications rejected — all in one place.

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1. The subsidy math: how much money, how

Rates per the 2024 amendment:

Plant type	CFA rate	Maximum cap
Non-torrefied pellets	₹21 lakh per TPH	Up to 5 TPH — a maximum of about ₹1.05 crore, or 30% of machinery cost, whichever is lower
Torrefied pellets	₹42 lakh per TPH	A maximum of about ₹2.1 crore per plant

Three things to remember:

• The 30% cap: if machinery costs ₹3 crore, 30% means ₹90 lakh — for a 1 TPH plant the calculation stays under ₹21 lakh. Only on a somewhat larger plant (3–5 TPH) does the full ₹21 lakh × TPH benefit come close.
• Back-ended payment: you won’t get the money first. Only after building and commissioning the project on a bank loan, and passing the performance test against the prescribed benchmark, is the CFA released — usually into the bank loan account or as a loan adjustment.
• Performance-linked: under the revised 2025 rules, the condition for the full CFA is a test that the plant can run 10 continuous hours at about 80% of rated capacity. And a SCADA/remote monitoring system is mandatory.

In plain words: the subsidy is not a cash-in-hand incentive; it is a tool to lighten the project’s debt burden. While planning, calculate whether the whole ROI works even without the subsidy — if it comes, treat it as a bonus.

2. Eligibility and key conditions

• New machinery: no CFA for plants with old/second-hand equipment — all machinery must be new.
• Individual, partnership, LLP, Pvt Ltd — all kinds of entrepreneurs can apply; self-funded projects are also eligible, but are then evaluated through the project appraisal committee.
• DPR (Detailed Project Report): a detailed project report is a must, covering location, raw-material supply chain, machinery list, power load, project cost and financials.
• In-Principle (IP) approval first, purchases later: you must apply on the BioURJA portal and get In-Principle approval before ordering machinery. After IP approval the plant must generally be commissioned within 12 months — otherwise the approval can lapse.

Caution: pay an advance on machinery before IP approval and you’ll land in tangles when claiming the subsidy. The correct order — land and raw material secured → DPR → IP approval → buy machinery → install → performance test → CFA release.

3. Steps to apply on the BioURJA portal

1. Registration: register as an entrepreneur at biourja.mnre.gov.in — the entity’s PAN, GST and bank details will be needed.
2. Application form: fill in plant type (pellet/briquette/cogeneration), capacity (TPH), location, raw-material sources.
3. DPR upload: get the DPR made by a CA/engineering firm and upload it — this is where most applications are weak.
4. In-Principle approval: for bank-financed projects, IP comes via MNRE IFD approval and the Secretary’s clearance; self-funded ones go the appraisal-committee route.
5. Installation and commissioning: commission the plant within 12 months and submit performance data including SCADA.
6. Testing and CFA release: after the designated agency’s inspection and the 80%-capacity test, the CFA is released.

4. The programme’s current status — straight talk

The programme was notified from FY 2021-22 up to FY 2025-26; in November 2025 an additional allocation of ₹140 crore for Phase-I was also approved. A separate extension notification for FY 2026-27 has not been publicly verifiable at the time of writing this guide (October 2026). Because the programme has been extended in phases before, don’t apply on a guess — decide after checking MNRE’s notifications section and the current guideline PDF on the BioURJA portal.

5. What can be combined with the subsidy

• States like Punjab and Haryana add 30–40% extra through their own state-level subsidies — in West Bengal, verify the state-level equivalent in the current policy of the West Bengal Renewable Energy Development Agency (WBREDA) and the Power Department.
• Bank loans: because the CFA is back-ended, building 70–80% of the project on a bank loan is the normal model — MSME term loans and CGTMSE-secured loans are linked in our Udyam section.
• Purchase security: with the SAMARTH mission’s 5% co-firing mandate, NTPC, DVC and WBPDCL issue pellet tenders regularly — the selling route is detailed in the tender guide.

6. Common mistakes that sink the application

1. Fixing the plant capacity before securing raw-material supply — if you can’t prove how much straw/residue is truly collectable within a 50 km radius each year, the DPR wobbles.
2. Second-hand machinery, or dropping SCADA to cut costs step by step.
3. Applying after buying machinery — break the IP-approval rule and the CFA is almost certainly forfeited.
4. Leaving the DPR and application “in an agent’s hands” — the applicant entity bears all the responsibility.