Madhya Pradesh Biofuel Subsidy 2025: CBG, Biomass & Biogas Projects

Madhya Pradesh is emerging as a leading biofuel hub in India. The state has abundant agricultural waste, livestock output and forest resources. This creates a strong base for biofuel projects such as CBG, biogas and biomass. To support investors, the government has introduced the Madhya Pradesh Biofuel Subsidy. The scheme reduces project cost and boosts financial returns.

We explain all key incentives, financial benefits, and subsidy opportunities. We also highlight why Finraja consultancy is essential for applicants who want to secure the maximum benefits.

Why Madhya Pradesh Offers Biofuel Incentives

The state wants to promote clean energy and rural income. Biofuels support both goals. They provide an alternative to fossil fuels and offer extra earnings to farmers. The government has stated that MP has huge biofuel potential because of its strong agricultural base.

To unlock this potential, the Biofuel Policy offers capital subsidies, tax benefits, land support and infrastructure assistance. These incentives reduce project cost and attract new investments.

Key Features of the Madhya Pradesh Biofuel Subsidy

The scheme offers many financial and non-financial incentives. These benefits apply to CBG, biomass, biogas, briquette and advanced biofuel projects.

Below are the main components.

1. Capital Subsidy for Biofuel Plants

The state provides a large capital subsidy. Eligible units can receive up to ₹200 crore per project. This support reduces the upfront financial burden on investors. It also makes the project more attractive to banks and lenders.

Most biofuel projects fall in the 10–40% subsidy range. Actual support depends on project size, location, and category.

2. Infrastructure Subsidy (50% Support)

The scheme covers important infrastructure items. This includes internal roads, electrical lines, pipelines, water supply and drainage.

The state provides 50% subsidy up to ₹5 crore for these facilities. This reduces capital investment and speeds up plant construction.

3. ETP & ZLD Subsidy (Environmental Compliance Support)

Environmental compliance is important for biofuel units. To support investors, the scheme provides:

• 50% subsidy up to ₹5 crore for ETP
• Up to ₹10 crore subsidy for ZLD systems

This support makes it easier for units to meet pollution norms. It also cuts the total cost of wastewater treatment systems.

4. Electricity Duty & Energy Cess Exemption

All eligible units receive 100% exemption on electricity duty for 10 years. The scheme also provides complete waiver of energy cess.

This reduces operating cost and improves long-term profitability. High-energy units such as CBG, biogas and biomass plants benefit the most.

5. Stamp Duty Subsidy (50% Reimbursement)

Investors buying private land receive 50% reimbursement on stamp duty. This can save several lakhs or even crores depending on land size.

6. Concessional Land at 50% Circle Rate

Biofuel units require large land areas. To support these projects, the state offers government land at 50% of the circle rate. This lowers land acquisition cost and makes large-scale projects more feasible.

Special Support for CBG and Bio-CNG Projects

CBG plants are a major focus of the Madhya Pradesh Biofuel Policy. The state promotes them because they generate clean fuel and reduce methane emissions.

Key benefits for CBG units include:

• Land requirement of about 10 acres for a mid-size plant
• Permission to set up CBG dispensing pumps
• Feedstock security through long-term contracts
• Capital subsidy and infrastructure support
• Additional support from central schemes such as SATAT and MNRE

A combined subsidy structure (Central + State) can significantly reduce the project’s net capital cost.

Biomass Briquette Subsidy & Biomass Co-Firing in MP

Madhya Pradesh is promoting biomass briquettes and pellets for thermal power plants. Biomass co-firing helps reduce coal use and supports clean energy.

Key incentives include:

• Briquette units are exempt from the ₹10 crore minimum investment rule
• High demand from co-firing in state and private power plants
• Support for supply-chain machinery (balers, rakers and trolleys)
• 30% top-up subsidy (up to ₹20 lakh) on biomass handling equipment

This strong demand reduces business risk and improves sales stability for briquette units.

Bio-Refinery Clusters & Feedstock Support

The state plans to develop bio-refinery clusters in regions with high biomass output. These clusters will support CBG, ethanol, biomass, and other biofuel units.

Feedstock supply is a major challenge in biofuel projects. To solve this, the state uses a “one block, one project” model. This ensures steady availability of raw material for each unit.

The government will also support FPOs and cooperatives that supply biomass. This builds a strong supply chain and reduces fuel shortages.

Financial Assessment – How Much Subsidy Can You Get?

This shows how subsidies can reduce project cost by 40–50%.

However, actual savings depend on full compliance, correct documentation, and project category. That is why investors prefer to work with professional consultants instead of applying on their own.

Conclusion

The Madhya Pradesh Biofuel Subsidy offers one of the strongest incentive packages in India. Investors can benefit from capital support, tax relief, environmental subsidies, and land discounts.

With the right planning and expert guidance, biofuel projects in MP can achieve high returns and strong financial stability.

If you want to start a CBG, biomass, biogas or briquette unit in Madhya Pradesh, our consulting support can help you unlock the full value of available subsidies.

Call us now: +91 9373114747 or visit finraja.com/contact for quick assistance.