India’s ambitious circular economy plan aims to transform agricultural waste into wealth, projecting a $2 trillion market by 2050 and creating 10 million jobs.
Despite substantial investments and schemes, the implementation faces challenges, particularly in biomass co-firing and crop residue management.
The success of this initiative hinges on transparent monitoring and consistent enforcement to achieve the promised outcomes.
On February 17, 2026, the Press Information Bureau released a note titled Circular Economy in Agriculture: Waste to Wealth, presenting an ambitious vision for India’s rural economy. It projected a circular economy market of $2 trillion by 2050 and the creation of up to 10 million jobs. The message was confident: Agricultural waste, long treated as a disposal problem, could become a driver of energy security, rural income and climate mitigation.
There is no doubt that the ambition is significant. Public expenditure has been substantial. Multiple ministries are involved. But when one moves beyond sanctioned amounts and headline figures to examine implementation data, especially on biomass co-firing and crop residue management, the narrative becomes more complex.
The schemes are real. The investments are documented. Whether the outcomes match the scale of the promise remains less certain.
India generates an estimated 350 million tonnes of agricultural waste every year. This includes crop residues such as paddy straw, husk and stubble; livestock waste including manure and carcasses; post-harvest losses; and food waste across processing, retail and households.
Agricultural residues alone hold the potential to generate over 18,000 MW of power, according to the Union Ministry of New and Renewable Energy.
Globally, 1.3 billion tonnes of food produced for human consumption is wasted annually. When unmanaged, organic waste releases methane, a greenhouse gas far more potent than carbon dioxide, and contributes to groundwater contamination.
Framed this way, agricultural waste management becomes both an environmental necessity and a rural development strategy. Yet, agricultural waste is not a uniform stream. It is dispersed, seasonal and regionally varied. Paddy-dominant North India faces stubble surpluses; sugarcane-producing western states have different residue profiles; dairy-intensive belts generate concentrated livestock waste; post-harvest losses depend on storage and logistics infrastructure.
Circularity in agriculture, therefore, requires interventions across multiple sectors simultaneously. That is where complexity begins.
The government’s response spans agriculture, energy, livestock and water management. The GOBARdhan programme aims to convert cattle dung, crop residues and food waste into compressed biogas (CBG) and organic manure.
As of January 14, 2026, 979 biogas plants were operational across 51.4 per cent of districts. Compressed biogas has been integrated into carbon credit trading frameworks, and standards under the Fertiliser Control Order have been simplified to ease market entry for organic manure.
The Crop Residue Management (CRM) scheme channelled Rs 3,926.16 crore between 2018-19 and 2025-26 to Punjab, Haryana, Uttar Pradesh, NCT-Delhi and ICAR institutions.
More than 42,000 Custom Hiring Centres were established to make residue management equipment accessible to small farmers. Over 324,000 machines, including Happy Seeders and Super Straw Management Systems, were distributed to promote in-situ management and reduce burning.
The Agriculture Infrastructure Fund (AIF), launched in 2020-21, sanctioned Rs 66,310 crore across 113,419 projects, mobilising total investments of Rs 107,502 crore. These include 2,454 cold storage facilities and 22,827 processing units, alongside warehouses and grading centres.
The Animal Husbandry Infrastructure Development Fund (AHIDF), with a corpus of Rs 15,000 crore, extends circularity to livestock waste, supporting dung-to-biogas systems and carcass management facilities.
Water reuse in agriculture is promoted under the Jal Shakti Mission through wastewater reuse, watershed development and groundwater recharge initiatives. These allocations indicate sustained commitment. What remains less clear is how consistently these investments translate into measurable environmental and economic outcomes.
Public debate often narrows agricultural waste to stubble burning and winter air pollution in Delhi. The problem is broader. Post-harvest losses occur during storage due to inadequate infrastructure; in transit due to delays; at mandis due to poor grading; and at processing units where inefficiencies reduce usable yield. These losses are quantitative, loss of weight and qualitative, deterioration in nutritional value and market quality.
The AIF’s investments in cold storage and processing are meant to address these gaps. However, publicly available information does not clarify how many of the sanctioned facilities are fully operational, functioning at designed capacity, or demonstrably reducing losses. Food waste at retail and household levels receives comparatively less policy attention, despite global estimates placing annual food waste at 1.05 billion tonnes in 2022.
Engineered biochar technology capable of converting food waste into soil amendments exists, but large-scale deployment remains limited. Animal carcass disposal is another uneven area. Disease outbreaks create acute challenges and infrastructure capacity varies widely across states. While policy frameworks acknowledge the issue, detailed operational data is sparse.
The most quantifiable element of the circular agriculture strategy is biomass co-firing in coal-based thermal power plants. Since 2017, coal-fired plants have been required to substitute part of their coal consumption with agro-residue pellets.
A 5 per cent mandate came in 2021, rising to 7 per cent from FY 2025-26. In 2023, a graded environmental compensation framework was introduced for non-compliance.
India’s coal-based capacity stands at around 213 GW across 191 plants. At 5 per cent co-firing, annual biomass pellet demand would reach around 38.55 million metric tonnes. In FY 2024-25, actual biomass consumption was around 1.62 million metric tonnes, around 4 per cent of the mandated requirement.
Only 68 plants adopted co-firing at all, according to the report Powering with Biomass: Learnings from Delhi-NCR and the way forward for Indian TPPs by the Centre for Science and Environment (CSE).
Nearly 80 per cent of biomass consumption was found to occur in Delhi and some nearby states: Haryana consumed 625,694 tonnes; Uttar Pradesh 349,835 tonnes; Punjab 358,979 tonnes.
States such as Andhra Pradesh, Karnataka, Rajasthan and Telangana reported negligible uptake despite substantial coal capacity and biomass availability.
This uneven performance is not due to resource constraints. India is estimated to have around 228 million tonnes of surplus biomass available annually for energy use, which is far more than what would be required even under a 10 per cent co-firing scenario.
In December 2025, the Commission for Air Quality Management issued show-cause notices to six coal-based plants for failing to meet requirements during FY 2024-25. Proposed environmental compensation totalled Rs 61.85 crore.
The Association of Power Producers cited supply constraints, limited domestic capacity for torrefied pellets, high rejection rates due to moisture, absence of solutions cleared by original equipment manufacturers and insufficient supplier capacity.
Talwandi Sabo Power Ltd (1,980 MW) in Punjab improved compliance after local pellet manufacturing support was established. The industry sought waiver or carry-forward of FY25 penalties. Yet, additional co-firing costs are recoverable through electricity tariffs, complicating the claim that cost alone explains non-compliance.
The 2023 Environment (Utilisation of Crop Residue by Thermal Power Plants) Rules prescribe environmental compensation but do not clearly specify how penalty funds should be utilised. Without earmarked deployment, whether for air pollution mitigation, supply chain strengthening or farmer support, compensation risks becoming fiscal rather than corrective.
Biomass pellet manufacturing capacity stands at roughly 30,000 tonnes per day across about 680 plants. At 5 per cent co-firing, daily requirement would be around 105,610 tonnes, more than three times the current capacity.
Manufacturers face reverse bidding pressures, pushing prices below the government benchmark of Rs 2.3 per 1,000 kcal, with bids reportedly falling to Rs 1.8.
Storage on leased agricultural land is insecure. Monsoon exposure can degrade calorific value by 15-20 per cent. Paddy straw’s high silica content leads to equipment breakdowns and costs around 30 per cent more to process than mustard residue. Some suppliers reportedly mix lower-calorific press mud to reduce costs. Sampling protocols have been criticised as vulnerable to manipulation.
Technical issues persist. Certain boiler manufacturers warn that biomass use may void defect liability periods. At Harduaganj’s 660 MW supercritical unit with a Doosan boiler, manufacturer instructions advise against biomass use. No national certification standard currently assures compatibility without affecting warranties.
The note presents a coordinated national effort backed by large-scale public investment. What it does not consistently provide is outcome-based evidence across sectors.
How much has stubble burning declined in absolute terms? How many of the 979 biogas plants operate at full capacity? Are the 3.24 lakh CRM machines in sustained use? Are cold storage and processing investments measurably reducing losses?
The biomass co-firing case illustrates a broader lesson: infrastructure design alone does not ensure adoption. Enforcement authority, regulatory clarity and institutional incentives determine outcomes. NCR’s relative progress underscores this. India’s circular economy ambitions in agriculture are both necessary and overdue.
The resources are significant. The frameworks are in place. But between sanctioned funds and systemic transformation lies a harder task, transparent monitoring, consistent enforcement and willingness to address underperformance. Waste can become wealth. Whether it does so at scale will depend less on announcements and more on accountability.