In a landmark decision, the Punjab Government under the leadership of Chief Minister Bhagwant Singh Mann has amended the Industrial and Business Development Policy 2022 to introduce a capital subsidy scheme for the installation of paddy straw-based boilers. This progressive move aims to increase farmers' income, promote effective stubble management, protect the environment, and provide significant benefits to the state’s industrial sector.
Addressing a press conference at Punjab Bhawan, Industry Minister Tarunpreet Singh Sond announced that the decision to provide capital subsidy for paddy straw as fuel in industrial boilers was taken during the Cabinet meeting held on February 13, 2025. The official notification was issued on February 20, 2025, followed by detailed subsidy guidelines on April 23, 2025.
The Minister informed that existing industrial units currently using coal, oil or other biomass fuels will be eligible for a capital subsidy if they install new paddy straw-based boilers. The capital subsidy will be Rs. 1 crore per 8 TPH (tonnes per hour) boiler or 33% of the actual expenditure, whichever is less, with a maximum limit of Rs. 5 crore per unit.
For existing units upgrading their boilers to use paddy straw, a subsidy of Rs. 50 lakh per 8 TPH boiler or 33% of the actual expenditure (whichever is lower) will be provided, subject to a cap of Rs. 2.5 crore per unit. Higher capacity boilers will be reimbursed proportionate subsidy support.
According to department estimates, 500 to 600 industrial units in Punjab are expected to benefit from this scheme, with Ludhiana-based industries, which are heavily boiler-reliant, likely to see the greatest advantage. The Punjab Government has earmarked a budget of Rs. 60 crore for this scheme.
Additionally, the Minister highlighted existing incentives such as 100% stamp duty exemption for land purchased for paddy straw storage and handling, along with 100% net State GST reimbursement (capped at 75% of total investment) for seven years. He emphasized that the objective of this policy is to encourage industrial development while ensuring environmental protection.
The new scheme will help reduce air pollution caused by stubble burning and promote sustainable use of paddy straw as a fuel source, benefiting the environment, farmers, and industries alike. Minister Sond stated that stubble burning has long been a serious environmental challenge in Punjab, and the state government has undertaken several measures to address it.
Promoting industrial use of paddy straw offers a long-term, sustainable solution to this issue. To avail of this scheme, industries must submit Consent to Establish certificate issued by the Punjab Pollution Control Board after February 20, 2025.
It is important to note that currently, the scheme is limited to existing industrial units and does not cover new establishments. The scheme will operate on a first-come, first-served basis. The Minister urged all eligible industries to apply promptly to the Department of Industries to benefit from this initiative.
As per the policy, subsidized boilers must operate using paddy straw for at least five years; otherwise, the subsidy will be subject to recovery.