Every year, roughly 92 million tonnes of crop residue, or stubble, is burned in open fields across India, particularly after the paddy harvest in Punjab, Haryana and Western Uttar Pradesh. What is often treated as agricultural waste can instead become a raw material for a business producing biomass pellets and briquettes.
The basic idea is simple: collect stubble from farmers, process it into biomass pellets, and sell those pellets to biomass industries and thermal power plants. The report also highlights opportunities to supply stubble to CBG plants and describes government subsidy schemes that can reduce the cost of setting up the required machinery.
How the Stubble-to-Pellet Business Works
The business model described in the report has three basic stages:
| Stage | Activity | Approx. Cost/Price per Quintal |
|---|---|---|
| 1 | Buy stubble from farmers | ₹150 |
| 2 | Fine grinding + high-pressure pelletizing | ₹250 |
| 3 | Sell to biomass industries / thermal plants | ₹500 |
Based on these figures, the report estimates that an investment of around ₹80 lakh can generate a net profit of about 30%, or approximately ₹24 lakh, as illustrated by the Navraj Singh success story.
The report also points to increasing demand from thermal power plants. According to the document, coal-based thermal power plants within a 300 km radius of Delhi are required to achieve a minimum 7% biomass blend in FY 2025-26, compared with the earlier 5% target, with the target set to increase to 10% by 2027-28.
The report notes that six plants were recently fined a combined ₹61.85 crore in an enforcement action involving non-compliance.
There is also another potential route for the raw material. At a larger scale, stubble can be supplied to Compressed Bio-Gas (CBG) plants, where farmers can earn ₹550 to ₹1,500 per tonne, described in the report as 1.5 to 2 times more than a standard pellet sale.
Real Examples From Punjab
The report highlights two examples of businesses working with agricultural residue in Punjab.
Navraj Singh — Ferozepur
Navraj Singh turned stubble collection into a larger-scale operation. According to the report, his operation covers nearly 1,000 acres, supplies straw to several states and employs approximately 36 workers.
His stated investment for the year was nearly ₹80 lakh, with an expected return of up to 30%.
The reported business economics are:
- Purchase price from farmers: approximately ₹150/quintal
- Processing and transport: approximately ₹250/quintal
- Selling price: approximately ₹500/quintal
- Investment: ₹80 lakh
- Expected return: 30%
- Expected profit: approximately ₹24 lakh
- Area of operation: approximately 1,000 acres
- Employment: approximately 36 workers
The source cited in the report is Khalsa Vox’s From Fields to Fortune: The Business of Paddy Straw.
Farm2Energy — Khanna
Farm2Energy was founded in 2016 by Sukhbir Singh Dhaliwal. Its original idea was to convert paddy stubble into bio-coal.
The business later expanded into pellet manufacturing at Khanna. According to the report, the factory processes paddy straw, corn stover, sugarcane trash and wheat straw, supplying biofuel, bio-power and bio-based industries.
In one recent season, the company collected stubble residue from 20,000 acres.
The report specifically notes that profit figures circulating about Farm2Energy could not be confirmed from a single verified published source and therefore should not be treated as confirmed figures.
What These Examples Show
The report identifies several lessons:
- A small start involving a few hundred acres can be enough to make the business viable.
- Depending on multiple crop residues and multiple buyers can reduce risk and improve margins.
- The business can generate local employment.
- Moving toward higher-value products such as CBG can increase profit margins by 1.5 to 2 times.
Government Subsidies for Biomass Pellet Plants
Government subsidies are an important part of the business model described in the report.
However, there is an important status update: as of the research date in August 2026, new applications on the MNRE BioUrja portal were paused. The report states that the last date for submitting Biomass and Waste to Energy applications was 31 December 2025, and proposals received after 10 October 2024 would be considered once the budget for National Bioenergy Programme Phase-II is approved.
Therefore, the report recommends checking the official portal before making an investment.
MNRE National Bioenergy Programme
The main central scheme discussed is the “A Scheme to Support Promotion of Manufacturing of Briquettes & Pellets Industries in the Country”, under the National Bioenergy Programme.
The scheme provides Central Financial Assistance (CFA), essentially a capital subsidy intended to reduce the upfront cost of plant and machinery.
The subsidy structure mentioned in the report is:
| Plant Type | Subsidy Rate | Maximum Cap |
|---|---|---|
| Briquette manufacturing plant | ₹9 lakh/MTPH | ₹45 lakh |
| Non-torrefied pellet plant | ₹21 lakh/MTPH or 30% of machinery cost, whichever is lower | ₹1.05 crore |
| Torrefied pellet plant | ₹42 lakh/MTPH | ₹2.10 crore |
MTPH means Metric Tonnes Per Hour, which represents the processing capacity of the plant.
Torrefied pellets receive a higher subsidy rate because the process involves an additional heat-treatment stage, making the pellets denser, more energy-rich and closer to coal in burning behaviour.
Subsidy Is Linked to Plant Performance
The report explains that the subsidy is not simply provided because a plant has been constructed.
Under the 2025 revised guidelines described in the document, receiving 100% of the approved subsidy requires demonstrating 80% Capacity Utilization Factor (CUF) continuously for 10 hours during inspection.
For example:
- 80% CUF → 100% of approved subsidy
- 73% CUF → 91.25% of eligible subsidy
- Below 50% CUF → zero subsidy
Only new machinery and new installations qualify. The project must also be commissioned within 12 months of receiving In-Principle Approval.
The report describes the process as:
Apply → Receive In-Principle Approval → Build and commission plant → Inspection → Subsidy release based on performance
CPCB Subsidy Scheme
The report also describes a separate Central Pollution Control Board (CPCB) scheme focused on NCR areas, including specified districts in Delhi, Punjab, Haryana, Rajasthan-NCR and UP-NCR.
The subsidy mentioned is:
| Type | Subsidy Rate | Maximum Cap |
|---|---|---|
| Pelletisation | ₹14 lakh/TPH | ₹70 lakh |
| Torrefaction | ₹28 lakh/TPH | ₹1.4 crore |
This scheme covers plant and machinery investment, but does not cover land purchase or civil construction such as buildings, sheds or foundations.
The report recommends checking eligibility under both the CPCB and MNRE schemes where applicable and applying to whichever scheme is currently open.
Crop Residue Management Scheme
The Crop Residue Management (CRM) Scheme is different from the pellet-plant subsidies.
Instead of funding pellet plants, it helps farmers obtain machinery used to collect and manage stubble in the field.
The report mentions equipment such as:
- Happy Seeder
- Super Straw Management System (SMS)
- Balers
- Rakes
Farmers can receive up to 80% subsidy on these machines, generally through Custom Hiring Centers.
For a pellet business, this can be important because reliable access to stubble is essential for maintaining the plant’s raw-material supply.
For Punjab, the report lists agrimachinerypb.com as the relevant portal.
State-Level Incentives
State governments also have their own renewable-energy incentives through State Nodal Agencies.
The report lists:
| State | Agency | Benefit Mentioned |
|---|---|---|
| Punjab | PEDA | Paddy straw pellet incentives |
| Haryana | HAREDA | Faster approvals, tax relief |
| Maharashtra | MEDA | 20% of machine cost, maximum ₹4 lakh |
| Uttar Pradesh | UPNEDA | Electricity duty & stamp duty waiver |
| Gujarat / Tamil Nadu | State SNA | 20–40% capital subsidy |
The report notes that state incentives can sometimes be combined with central subsidies, but the stacking rules must be confirmed with the relevant agencies before assuming that both can be claimed.
For Punjab-based entrepreneurs, the report describes PEDA incentives as particularly relevant because Punjab is the epicentre of the stubble-burning problem.
Other Financial Advantages
The report states that biomass pellets attract 5% GST under HSN Code 4401.
It also describes the Farmer Producer Company (FPC) route. A group of farmers can form an FPC, which is a legal entity jointly owned by farmer-members.
According to the report, some government schemes can provide more favourable subsidy eligibility to FPCs, with eligibility reaching up to 90% in some scheme categories, compared with a standard 30% capital subsidy for individual applicants.
Where Can You Sell Biomass Pellets?
Having a plant is only one part of the business. Finding buyers is equally important.
The report lists several platforms and buyers:
| Platform / Buyer | Purpose |
|---|---|
| NTPC eProcurement | Official NTPC tenders |
| GeM | Bid submission |
| SAMARTH | Vendor registration |
| BiofuelCircle | Auctions and managed selling |
| SATAT | CBG buyers |
| Nabha Power Ltd | Direct buyer in Punjab |
| Talwandi Sabo Power Ltd | Direct buyer in Punjab |
| Guru Nanak Dev Thermal Plant | Direct buyer in Punjab |
The recommended registration sequence in the report is:
- Register on SAMARTH
- Register on GeM
- Create a seller profile on BiofuelCircle
- Approach Punjab-based buyers directly
The report highlights local buyers as potentially advantageous because being closer to the plant can reduce transportation costs.
Pellet Quality Matters
Before bidding for tenders, the pellet quality needs to meet the buyer’s specifications.
The report gives a typical benchmark of around 3,400 kcal/kg Gross Calorific Value (GCV).
However, each tender can specify its own requirements, including:
- Floor price
- Target price
- Required quantity
- Moisture limits
- Truck type
- Delivery location
Therefore, the report recommends reading the complete tender document before submitting a bid.
Step-by-Step: How to Start the Business
The report lays out a 12-step roadmap.
Step 1: Get Farmer Commitments
Before spending money on machinery, secure commitments for at least 2,500–3,000 tonnes of stubble per season from farmers in the target area.
Step 2: Confirm Buyers
Before purchasing machinery, identify 2–3 buyers and understand the demand and price at which you can realistically sell.
Step 3: Prepare a Detailed Project Report
A Chartered Accountant should prepare a project report covering machine costs, plant setup costs and ROI projections.
The report says this is required for subsidy applications and bank loans.
Step 4: Register on SAMARTH
Vendor registration on SAMARTH is described as mandatory for supplying to power plants.
Step 5: Register on GeM
GeM registration allows the business to submit bids and access tender documents.
Step 6: Contact the State Nodal Agency
For Punjab, the report identifies PEDA as the relevant agency for state-level renewable-energy schemes.
Step 7: Check Central Subsidy Status
Keep checking the MNRE BioUrja portal for the reopening of Phase-II applications. NCR-based projects should also check the CPCB scheme.
Step 8: Buy Machinery Only After Approval
The report strongly emphasizes getting In-Principle Approval before purchasing machinery because purchasing equipment beforehand can result in the subsidy claim being rejected.
Step 9: Commission the Plant
The plant must be commissioned within 12 months of approval.
Step 10: Get the Plant Inspected
After commissioning, arrange the required performance inspection. The report states that geo-tagged photos and video are mandatory during the inspection.
Step 11: Start Selling
Once the plant is operational, pellets can be sold through NTPC/GeM tenders, BiofuelCircle auctions or directly to Punjab-based plants.
Step 12: Explore CBG
After stabilizing the business, the report recommends considering diversification into areas such as bio-coal and CBG feedstock.
The Numbers at a Glance
According to the report’s business model:
| Business Metric | Amount |
|---|---|
| Stubble purchase price | ₹150/quintal |
| Processing + transport | ₹250/quintal |
| Selling price | ₹500/quintal |
| Approx. net margin | ~30% |
| Example investment | ₹80 lakh |
| Example expected profit | ~₹24 lakh |
Final Takeaway
The stubble-to-pellet business described in the report is built around a straightforward idea: turn agricultural residue into a commercially usable fuel instead of treating it as waste.
The examples of Navraj Singh in Ferozepur and Farm2Energy in Khanna demonstrate how stubble collection and processing can be scaled across large areas and diversified across different crop residues and end industries.
But the report’s most important practical advice is not to start by purchasing machinery.