Madhya Pradesh Unveils Biofuel Push with Major Incentives

25 Apr 2025 CW Team

The Madhya Pradesh government has launched a new biofuel policy under its Renewable Energy Policy 2025, aiming to set up at least one biofuel plant in every development block. The initiative offers a wide range of fiscal and regulatory incentives to attract private investment, reduce rural waste, and boost farmer income.

The focus will be on advanced biofuels like compressed biogas (CBG), biodiesel, and bio-coal, excluding first-generation ethanol. The policy is backed by capital subsidies of up to Rs 2 billion under the Basic Investment Promotion Assistance (BIPA) scheme, disbursed over seven years. An extra Rs 50 million is allocated for critical infrastructure, and projects using zero liquid discharge (ZLD) systems can claim up to Rs 100 million more.

Only one plant will be permitted per block, with investors selected by a District Committee headed by the local Collector.

To further encourage participation, government revenue land will be offered at 50 per cent of the circle rate, while forest and agricultural land for biomass use will be available at just 10 per cent of the annual guideline rate. Land requirements will vary by plant size — for instance, a 10-tonne-per-day CBG unit will need 10 acres. Lease terms will span 30 years, with a renewal option.

The policy also waives electricity duty and energy development cess for 10 years. Private land purchases will get a 50 per cent stamp duty reimbursement. Projects supplying electricity to third parties can seek exemptions from cross-subsidy and additional surcharges, subject to regulatory approval.

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