India Biomass Market: Market Size & Forecast 2026

India's biomass market draws on the country's position as a major agricultural economy, converting crop residues, bagasse, animal waste, and municipal organic waste into electricity, heat, and biofuels. The market spans multiple value chains, from biomass collection and processing to power generation through dedicated biomass plants, bagasse-based cogeneration at sugar mills, and emerging biogas and compressed biogas (CBG) facilities. Installed biomass power capacity has made India one of the world's largest biomass-based power generators, with additional growth coming from the emerging CBG segment under the SATAT scheme.

• •India ranks among the top biomass power generators globally, with significant capacity from bagasse cogeneration and dedicated biomass projects
• •The market encompasses power generation, biogas, compressed biogas (CBG), and bioenergy from agricultural and municipal waste streams
• •Key feedstock categories include crop residues, bagasse, animal dung, forestry waste, and municipal solid waste

Government policy frameworks are the primary engine of market expansion, with India's National Bioenergy Programme and renewable purchase obligations mandating biomass and waste-to-energy procurement by distribution companies. The SATAT scheme targets production of compressed biogas to support sustainable transportation, creating a structured offtake market for CBG producers. Additional support comes from biomass briquette and pellet promotion policies aimed at replacing imported coal in thermal power plants and industrial boilers, particularly in eastern and southern India where agricultural residue burning is a significant environmental concern.

• •National Bioenergy Programme and renewable purchase obligations create mandated demand for biomass-based power
• •Government compressed biogas production targets and offtake commitments by public sector oil companies drive investment in anaerobic digestion projects
• •Biomass pellet and briquette policies incentivize use of agricultural residues as a substitute for imported coal in thermal power generation

The market is broadly segmented by feedstock type, agricultural residues, bagasse, wood and forestry waste, animal waste, and municipal organic waste, and by application across power generation, cogeneration, biogas and CBG, and biofuels. Geographically, biomass potential is concentrated in states with substantial agricultural output and sugar production, including Maharashtra, Karnataka, Uttar Pradesh, Punjab, Haryana, Tamil Nadu, and Andhra Pradesh. Maharashtra and Karnataka lead in bagasse-based cogeneration capacity due to their large sugar mill clusters, while Punjab and Haryana offer immense potential from rice straw and other crop residues, though logistics and aggregation infrastructure remains a challenge in northern states.

• •Agricultural residues constitute the largest feedstock category, with rice straw and wheat straw dominant in Punjab, Haryana, and Uttar Pradesh
• •Bagasse-based cogeneration is concentrated in Maharashtra and Karnataka, where large sugar mill clusters provide steady feedstock supply
• •The CBG segment is growing fastest in western and southern states, including Gujarat, Maharashtra, and Tamil Nadu, where anaerobic digestion projects are attracting significant investment

What are the recent trends and outlook?

The sector is moving toward greater integration with India's circular economy agenda, with increasing emphasis on sourcing biomass from agricultural and municipal waste streams rather than dedicated energy crops. Co-firing of biomass pellets in coal-fired power plants is being actively promoted as a transitional decarbonization strategy, with the Indian Railways and several state utilities already piloting pellet co-firing programs. Digital traceability platforms are emerging to address supply chain transparency and feedstock quality assurance, while the CBG segment is expected to see accelerated deployment as production scales and infrastructure for gas pipeline injection and retail distribution matures over the 2025-2035 horizon.

• •Co-firing of biomass pellets in coal-based power plants is being scaled as a policy priority to reduce import dependence and cut emissions
• •The compressed biogas segment is expected to accelerate as CBG production scales and pipeline and retail distribution infrastructure matures
• •Digital supply chain platforms are emerging to improve feedstock traceability, quality control, and logistics efficiency in the biomass sector