Madhya Pradesh government has announced a comprehensive policy for biofuels under the Madhya Pradesh Renewable Energy Policy 2025. The new initiative aims to establish at least one biofuel plant in every development block, supported by significant financial and regulatory incentives.

Targeting compressed biogas (CBG), biodiesel, bio-coal, and other advanced biofuels (excluding first-generation ethanol), the policy is designed to attract investment, reduce rural and agricultural waste, and increase income for farmers and biomass aggregators.

Capital subsidies of up to Rs 200 crore are available under the Basic Investment Promotion Assistance (BIPA) scheme, to be disbursed over seven years. An additional Rs five crore is allocated for critical infrastructure, while projects employing zero liquid discharge (ZLD) systems for waste management can access up to Rs 10 crore more. Only one biofuel plant will be allowed per development block, with investors selected by a District Committee led by the Collector.

Government revenue land will be offered at 50 percent of the circle rate, and forest or agricultural land for biomass usage at just 10 percent of the annual guideline rates. Minimum land requirements have been specified according to plant capacity, such as 10 acres for a 10-tonne-per-day CBG unit. Leases will span 30 years, renewable upon mutual consent.

Further sweetening the deal, the policy offers a 10-year waiver on electricity duty and energy development cess. Projects can also claim a 50% reimbursement on stamp duty for private land purchases. For those supplying electricity to third parties, exemptions from cross-subsidy and additional surcharges are permitted, pending Electricity Regulatory Commission approval.