India Biomass Pellet & Briquette Market 2026: Size, Growth, Price Trends & Future Outlook

Ten years ago, a truckload of paddy straw or groundnut shell leaving a Punjab or Gujarat farm had exactly one destination: a matchstick. Today, that same truckload is more likely headed to a pelletizing unit, where it gets crushed, dried, compressed, and shipped to a thermal power plant, brick kiln, or textile boiler — sold by the tonne, tracked by GCV, and increasingly required by law.

That shift is not a niche renewable-energy story anymore. It is one of the fastest-moving segments in India’s industrial fuel economy, and 2026 is turning out to be the year it stopped being optional for a large slice of Indian industry.

This report breaks down where the India biomass pellet and briquette market actually stands in 2026 — the numbers, the policy machinery driving demand, the price trends, the regional hotspots, and what to expect through 2030 — for plant managers, procurement teams, investors, and anyone evaluating a switch away from coal, diesel, or firewood.

Market research houses don’t fully agree on the exact number — a common problem in a young, fragmented industry — but the direction is unanimous.

That last figure is the one worth sitting with. India isn’t short on demand for biomass pellets. It’s short on supply. For manufacturers and buyers alike, that supply-demand gap is the single most important fact shaping this market in 2026.

This is the biggest structural driver in the entire market, and it’s relatively recent.

In 2021, the Ministry of Power issued a biomass co-firing policy for coal-based thermal power plants (TPPs). It was revised on 16 June 2023 to mandate 5% biomass co-firing from FY 2024–25, rising to 7% from FY 2025–26, with industry commentary pointing toward a further move to around 10% by 2027–28.

What changed the tone of this policy from “guideline” to “law with teeth” was enforcement. Under the Environment (Utilisation of Crop Residue by Thermal Power Plants) Rules, 2023, coal-based plants within 300 km of Delhi must blend a minimum of 5% agro-residue-based pellets or briquettes with coal. In late 2025, the Commission for Air Quality Management (CAQM) issued environmental compensation demands totaling ₹61.85 crore against six major NCR thermal plants for missing their FY 2024–25 blending targets — including a single ₹33 crore penalty on one plant. From FY 2025–26, NCR plants face an even tighter requirement: 5% biomass pellets plus an additional 2% biomass or MSW-based torrefied charcoal, while plants elsewhere continue at 5%.

For pellet manufacturers, this converts a “nice-to-have” green initiative into a captive, government-mandated buyer base — with actual financial penalties attached to non-compliance. That’s a rare kind of demand certainty in any commodity market.

Every October–November, satellite images of North India lighting up with post-harvest field fires have become a familiar (and grim) media story. That crop residue — paddy straw, wheat stubble, cotton stalks — is exactly the raw material biomass pellet plants need.

State and central pressure to reduce stubble burning has pushed procurement schemes, capital subsidies, and dedicated collection infrastructure toward converting this residue into pelletized fuel rather than letting it go up in smoke. Punjab, Maharashtra, and UP now offer 15–25% capital subsidies, power tariff waivers, and tax concessions specifically to encourage biomass processing capacity in agriculture-heavy belts.

Biomass fuel has one underappreciated advantage over coal and diesel that shows up clearly once a plant runs the numbers: price stability. Coal prices track global benchmarks and freight costs that swing with geopolitics; diesel is even more volatile. Agro-residue pellets, sourced locally from farms within a few hundred kilometers of the processing unit, are far less exposed to those shocks — which is why procurement officers increasingly treat the switch as a hedging decision, not just a sustainability one.

Maharashtra’s Bamboo Industry Policy 2025 (notified 2 December 2025) is a good example of how state governments are now writing their own co-firing rules on top of the central mandate — in this case requiring all public and private thermal power plants in the state to blend 5–7% bamboo-based biomass or charcoal with coal, legally enforceable from the notification date. Expect more states to follow with crop-specific or region-specific mandates through 2026–2027.

The government hasn’t only created demand — it has actively worked to make it easier to build supply:

Gujarat — particularly the Rajkot–Jamnagar–Morbi–Surat belt — remains one of India’s most active biomass manufacturing and consumption zones, thanks to a dense mix of ceramic, textile, chemical, and food processing industries that all run coal- or diesel-fired boilers, plus abundant groundnut shell, cotton stalk, and agro-residue feedstock from Saurashtra’s farms.

Punjab and Haryana supply the largest volumes of paddy straw feedstock in the country, driven directly by stubble-burning mitigation policy.

Maharashtra and Madhya Pradesh are emerging as the most compelling states for new capacity investment in 2026, driven by fresh state-level co-firing mandates (including Maharashtra’s bamboo policy) layered on top of the central 5–7% requirement — creating what industry analysts describe as a 12–17 million tonne supply gap in these states alone.

Delhi-NCR is the most tightly regulated and most closely watched region, given the CAQM’s direct enforcement powers and the 300 km blending radius rule.

Biomass pellet and briquette pricing in India is not centrally fixed — it moves with feedstock season, moisture content, GCV (Gross Calorific Value), transport distance, and local supply-demand balance. A few consistent patterns show up across 2026 market data:

If there’s one number that defines this market’s near-term future, it’s this: co-firing mandates alone require an estimated 15–20 million tonnes of biomass pellets a year, against organized national production capacity of roughly 2.5 million tonnes. Layer on rising demand from brick kilns, textile boilers, food processing plants, and chemical units switching off coal and diesel, and the gap only widens.

That gap creates real operating risk for buyers who haven’t secured supply, and it explains several patterns worth watching through 2026:

The days of biomass pellets being a “power plant only” story are over. Demand is now spread across:

For a plant manager or procurement officer evaluating biomass for the first time, the market data above translates into a fairly consistent decision path:

The overall trajectory is unambiguous: India’s biomass pellet and briquette market is moving from a fragmented, price-sensitive commodity trade into a policy-anchored, quality-driven industrial fuel category — and the next few years will separate suppliers who can prove consistent quality and reliable volume from those who can’t.