Biomass Energy in India: The Policy Landscape Heading into 2027

Several policies touch biomass fuel in India, but they act on different parties. Some address power plants, some address people who build pellet or briquette plants, and some address emissions accounting. This overview sets out each one with its source. It makes no market-size forecast, because we cannot verify one. The position is as of October 2026; confirm with the issuing authority.

Power Plant Co-firing

The Ministry of Power’s Comprehensive Policy of 7 November 2025 requires coal-based thermal power plants to use a 5% blend by weight of biomass pellets from FY 2025-26, with an additional 2% for plants in the NCR. The obligation is on the plants. A pellet supplier has no compliance status under it.

Support for Manufacturing Plants

The MNRE National Bioenergy Programme provides Central Financial Assistance to briquette and pellet manufacturing plants. Since 16 July 2024 the assistance has been ₹21 lakh per MTPH for non-torrefied pellet plants (cap ₹105 lakh), ₹42 lakh per MTPH for torrefied plants (cap ₹210 lakh) and ₹9 lakh per MTPH for briquette plants (cap ₹45 lakh). Phase I ended on 31 March 2026, and we have not verified the terms of a later phase. This is support for plant builders, not for fuel buyers.

Tax

Biomass briquettes and solid bio-fuel pellets are listed at 5% GST, and coal is at 18% with the ₹400 per tonne compensation cess ended (as of October 2026; confirm on the CBIC GST rate schedule). See our GST guide for the notification details.

Emissions Accounting and the CCTS

Under IPCC 2006 rules, biogenic CO₂ from biomass combustion is reported separately from energy-sector totals. The Carbon Credit Trading Scheme sets intensity targets for notified sectors, and credits come from obligated entities that beat targets or from registered projects under approved methodologies. A fuel buyer does not receive credits automatically.

Feedstock Availability

Estimates of agro-residue vary. The SAMARTH Mission cites about 750 million tonnes generated each year, of which about 228 million tonnes is surplus; an older MNRE-linked estimate put the surplus at about 140 million tonnes. These are national estimates, and local availability and price depend on crop cycles, competing uses and logistics.

What This Means for Industrial Buyers

Reading Policy as a Buyer, Not a Forecaster

Policy announcements tend to blur together in trade press. For a plant manager, the useful habit is to ask one question of each: who does this actually bind, and does it change what my boiler needs on Monday morning? Applying that test to the measures above produces a clear answer. Co-firing binds power plants. The bioenergy programme assists plant builders. The credit scheme binds notified entities. GST affects the invoice. None of them tells a textile unit or a dairy what fuel to burn.

What Could Move Demand for Industrial Biomass

Since the policies do not mandate industrial fuel switching, demand moves through indirect channels. These are worth watching without assuming any outcome.

• Power plant offtake: if thermal plants buy pellets against their own fuel specification, regional pellet supply and delivered pricing can tighten for smaller industrial buyers in the same catchment.
• Residue competition: more manufacturing plants drawing on the same crop residue can affect local collection prices, especially in the months after harvest.
• Customer and lender requirements: export buyers and banks increasingly ask for fuel and energy data in sustainability questionnaires. This is a commercial pressure, not a regulatory one.
• Tax and rate changes: GST schedules and notifications can be amended, so contracts should state the rate applied at invoicing.

Things to Verify Before Relying on Any Headline

1. Find the original notification or policy document and note its date. Summaries often omit conditions and end dates, as with programme phases.
2. Check whether the measure applies to you, to your supplier, or to a third party such as a power utility.
3. Separate national estimates from local reality. A national surplus figure says little about what is available within a practical haulage distance of your boiler.
4. Treat any promise of credits, subsidies or regulatory status attached to a fuel purchase with caution until you can see the rule that creates it.

Building a Plan That Survives Policy Change

Because rules can shift, a sound fuel plan rests on things you control. Specify the fuel by measurable properties and ask for a batch lab report with each delivery. Keep a dual-fuel capability while you learn how your boiler behaves on biomass. Review the contract at set points rather than locking in for years on the strength of an expected policy tailwind. Our co-firing policy article goes deeper on the power-sector measure, and the carbon credits and ESG piece explains what the credit scheme does and does not offer a fuel buyer.

Use the fuel cost calculator to compare cost per million Kcal on your own delivered prices, and revisit it when any input changes. Decisions that hold up on cost, reliability and handling alone are the ones least exposed to the next policy revision.