As crop waste piles up and climate pressures intensify, industry leaders argue that targeted fiscal incentives—not just broad sustainability rhetoric—are essential to unlock India’s bio-manufacturing potential.

India’s ambition for sustainable, resilient growth is increasingly tied to the success of its bio-economy and circular materials ecosystem. While recent Union Budgets have highlighted climate-conscious development, startup growth, and MSME credit expansion, targeted fiscal and policy support for circular materials and bio-based manufacturing has remained limited. As a result, one of India’s largest untapped resources—agricultural residue—continues to be treated as waste rather than economic input.

The scale of the opportunity is difficult to ignore. India generates more than 500 million tonnes of crop waste annually, much of which is burned due to a lack of viable downstream markets. This practice contributes significantly to air pollution, greenhouse gas emissions, and public health risks, while also representing a missed opportunity to create value-added bio-materials for domestic and global markets.

Industry experts argue that converting farm residue into bio-based materials—ranging from sustainable packaging to industrial inputs—could simultaneously address environmental degradation, strengthen rural incomes, and position India as a competitive hub for climate-friendly manufacturing. But unlocking that potential requires more than intent; it demands targeted policy intervention.

“The government has taken meaningful steps to support sustainable growth through startups and MSMEs,” says Mahadev Chikkanna, Founder & CEO of MYNUSCo, “but targeted fiscal incentives for circular materials and bio-manufacturing are still lacking.”

According to Chikkanna, the Union Budget 2026–27 represents a critical inflection point. “For the upcoming Union Budget 2026, we expect stronger policy support for bio-economy innovation and circular materials—especially incentives that encourage sustainable manufacturing, support farm waste utilisation, and catalyse adoption of eco-friendly materials across consumer and industrial value chains,” he says.

He notes that while Budget 2025–26 reinforced access to capital through MSME credit expansion, it stopped short of creating dedicated levers for circular materials at scale. “Transforming crop waste into value-added materials can significantly reduce environmental impact, but it requires long-term investment in R&D, manufacturing infrastructure, and export competitiveness,” Chikkanna adds.

Among the measures industry leaders are advocating for are R&D tax credits for sustainable materials, export incentives for bio-based products, and policy-backed support for scaling bio-manufacturing infrastructure. Such interventions, they argue, would help India move decisively from a linear resource model toward a circular materials economy—one that aligns climate goals with industrial growth.

Beyond environmental gains, the economic implications are equally compelling. A robust bio-economy could unlock new income streams for farmers, reduce dependence on imported materials, and create globally competitive manufacturing clusters rooted in sustainability.

As India balances growth, climate commitments, and global competitiveness, the bio-economy is no longer a niche opportunity—it is a strategic lever. Whether Budget 2026–27 chooses to pull it may determine how quickly India can convert agricultural waste into a cornerstone of climate-friendly innovation.

— Suchetana Choudhury (suchetana.choudhuri@agrospectrumindia.com)