Scheme for Implementation of Biofuel Projects in Madhya Pradesh
Up to ₹200 Cr
Basic Investment Promotion Assistance
100%
Electricity Duty Exemption, 10 Years
50%
Infra & Green Industrialisation Assistance
50%
Circle Rate for Plant & Machinery Land
Why the scheme exists
Madhya Pradesh, a leading agrarian state, holds significant potential for biofuel production from its agricultural resources and biomass. The scheme aims to reduce import dependence, strengthen energy security, cut greenhouse gas emissions and create rural employment — promoting sustainable use of agricultural residues, non-food biomass, non-fossil oils, biogenic CO2 and industrial and municipal waste streams, preventing open-field biomass burning, and developing bio-refinery clusters. Notified vide Order No. F-NRE-5-0003-2025-Six, Gazette No. 107 dated 4 April 2025, approved by the Council of Ministers on 18 February 2025, with the Commissioner, New & Renewable Energy Department as nodal agency.
Eligible biofuel categories
- •Briquettes and pellets from biomass, torrefied biomass and biochar.
- •Synthesis gas (syngas) through biomass gasification.
- •Bio-CNG and CBG from agricultural residues, animal dung, food waste, pressmud, spent wash, MSW and sewage water.
- •Biodiesel from non-edible vegetable oils, acid oil, used cooking oil, animal fat and bio-oil.
- •Biomass-based power and cogeneration projects, including bagasse.
- •Drop-in fuels meeting Indian MS, HSD or jet-fuel standards, usable without engine modification.
- •Electricity, heating, cooling and industrial steam from renewable resources; clean cooking initiatives.
- •Biomass-to-green hydrogen aligned to the National Green Hydrogen Mission; biogenic CO2 capture plants.
- •Algae-based 3G biofuels, halophyte-based biofuels, bio-methanol and DME derived from bio-methanol.
First-generation bioethanol from sugar or starch-based crops such as corn, sugarcane and molasses is expressly excluded, since an existing framework already promotes it. The full incentive structure applies to biofuel manufacturing and biomass supply-chain units investing more than ₹10 crore — but that threshold does not apply to biomass briquette and pellet plants, biomass-based steam generation units, power and cogeneration projects, biomass supply chain companies, or conversion of existing Sewage Treatment Plants into biofuel plants.
What's on offer
| Incentive | Quantum |
|---|---|
| Basic Investment Promotion Assistance | Per the Annexure-I formula, capped at ₹200 crore, disbursed in 7 equal annual instalments |
| Infrastructure Development Assistance | 50% for power, water, gas pipeline, road, drainage and sewage infrastructure up to the factory gate, max ₹5 crore, where the investor uses private or undeveloped government land |
| Green Industrialisation Assistance | 50% up to ₹5 crore for waste-management systems (ETP, STP, pollution-control devices); up to ₹10 crore for ETP with Zero Liquid Discharge — paid in 2 equal annual instalments |
| IPR Assistance | 100% reimbursement of patent, copyright, trademark and GI filing expenses, max ₹10 lakh per unit, for the first 5 years |
| Quality Certification | 50% of cost or ₹1 lakh, whichever is lower |
| Electricity Duty Exemption | 100% on generation and consumption for 10 years from COD, per the MP Vidyut Shulk Adhiniyam 2012 |
| Energy Development Cess Exemption | No cess payable on power supplied or consumed for 10 years from COD |
| Cross-Subsidy / Additional Surcharge | Nil for 10 years from COD on power supplied, consumed or self-consumed, subject to MPERC approval |
| Stamp Duty Reimbursement | 50% on stamp duty for purchase of private land for the project |
| CCIP Customised Package | Mega industrial units investing above ₹500 crore may avail a customised package under CCIP, per IPP 2025 |
BIPA formula and multipliers
BIPA varies between 40% and 10% of Eligible Fixed Capital Investment, per the Annexure-I formula: BIPA = IF(EFCI>2000, 200, IF(EFCI<=50, 0.4*EFCI, MIN(15 + 0.08*(EFCI-50) + (EFCI/12) * ((1/(1+EXP(-5.9*(1 - EFCI/2490))))*(1 - EFCI/2490)) + 9.3*(1 - EFCI/2500), 0.4*EFCI))).
| Multiplier | Range | Basis |
|---|---|---|
| Gross Supply Multiple | Reduces proportionately if unmet | Year 1: 1 if capacity utilisation is at least 40%. Year 2 onward: 1 if production is at least 75% of the previous peak year or 50% of installed capacity, whichever is more |
| Export Multiple | 1.0 – 1.3 | For exports of 25% to 75% of total production; 1.0 for units in SEZ areas |
| Employment Multiple | 1.0 – 1.5 | For employment from 100 to 2,500 employees. EYM = MAX[1, MIN{1.5, (1 + (AE−100) × ((1.5−1)/(2500−100)))}] |
| Geographical Multiple | 1.3 | For units set up in priority blocks |
EFCI includes plant and machinery per the MSMED Act (excluding old machinery and separately-counted ETP, STP, ZLD, pollution-control, WHRS and cogeneration equipment); factory sheds and buildings excluding compound wall, internal roads and dwellings; in-house R&D capped at 40% of plant, machinery and buildings (50% for pharmaceuticals and biotechnology) registered under DSIR; 50% of captive renewable power cost capped at 20% where at least half the power is consumed on site; 20% of energy-saving device cost capped at 20%; and imported second-hand machinery with an expected life of 10 years.
Land provisions and the biomass supply chain
- •Revenue land for bio-energy plant and machinery is available at 50% of circle rate — this applies only to plant and machinery land, not land used for producing biomass.
- •Government land for biomass generation on contiguous parcels may be permitted by CCIP at annual charges of 10% of the prevalent collector rate.
| Plant Type | Indicative Land Norm |
|---|---|
| Compressed Biogas (CBG) plant | 10 acres for a 10-ton capacity plant |
| Bio-coal / briquette plant | 0.02 acre per ton per day of capacity |
| Biodiesel plant | 0.015 acre per kL per day of capacity |
Departmental roles in the supply chain
- •Agriculture Department: trains and handholds one aggregator per development block, with FPOs and cooperative societies able to act as aggregators, and facilitates long-term agri-waste supply contracts.
- •Forest Department: makes forest-area biomass available to nearby projects and analyses biomass growable in degraded forests.
- •Animal Husbandry Department: cooperates on CBG plants under the SATAT scheme through long-term contracts for animal-shelter land and cow-dung availability, and fixes cow-dung pricing from private gaushalas.
- •Urban solid waste and APMC waste: long-term feedstock contracts between Krishi Upaj Mandis and CBG plants. An IT-based portal and mobile app will bring aggregator, farmer and project onto one platform.
- •A District-Level Committee chaired by the Collector coordinates farmers, aggregators and projects, sets district-wise waste pricing, provides regulatory support for transport, facilitates clearances and reviews farmer payments.
Additional support: investors may sell CBG through their own pump after statutory clearances; MP Power Generating Company's thermal plants will preferentially purchase crop-residue pellets, with the mandatory biomass co-firing blend raised to 7% from FY 2025-26. Farm equipment subsidy for biomass collection — GoI provides 50% under the Sub-Mission on Agriculture Mechanization, and Madhya Pradesh adds a further 30% up to ₹20 lakh per equipment set. Bio-manure from Bio-CNG plants is recognised as Fermented Organic Manure under the Fertiliser Control Order 1985.
Registration and governing conditions
- 1Registration — the unit is registered by the Commissioner, New & Renewable Energy Department, GoMP.
- 2Application with documents — MoA and AoA or society bylaws, partnership deed where applicable, last 3 years' balance sheets or the promoter's balance sheet for a startup, a Pre-Feasibility Report, and registration fees of ₹20,000 per crore of investment.
- 3Approval documents within 3 months — Detailed Project Report, Biomass Assessment Report, land documents with marked site, CPM/PERT implementation chart, water allocation order, and NOC from the concerned urban body or village panchayat.
No other bio-energy project will be registered within the same block, to ensure continuous biomass availability and avoid supply conflicts. The District-Level Committee may extend the catchment area to other blocks based on project capacity and biomass requirement — so block selection is a first-mover consideration, not just a siting decision.
- •A high-powered committee chaired by the Chief Secretary monitors, reviews, coordinates inter-departmentally and resolves implementation difficulties.
- •Facilities and incentives are payable only for technologies approved by the Ministry of New & Renewable Energy or under the National Biofuels Policy 2018 as amended.
- •Mixing fossil-based fuels with waste or biomass is not permitted, unless explicitly allowed under GoI schemes such as EBP, CBG blending or biomass co-firing.
- •Existing units expanding or diversifying into biofuel production must maintain a clearly demarcated unit; assistance for expansion is at par with new standalone units.
Source: Scheme for Implementation of Biofuel Projects in Madhya Pradesh, Order No. F-NRE-5-0003-2025-Six, MP Gazette (Extraordinary) No. 107 dated 4 April 2025, New & Renewable Energy Department. Read together with the MP Renewable Energy Policy 2025 and its Guidelines.