The Union Cabinet has approved a ₹23,731-crore national circular bioenergy scheme, offering compressed biogas producers assured purchases, an administered price of ₹2,110 per MMBTU for at least 10 years and capital assistance to scale domestic output nearly ten-fold and reduce dependence on imported natural gas.
The GOBARdhan scheme, to be implemented from FY27 to FY36, seeks to address the viability and financing hurdles that have constrained compressed biogas projects despite India’s large availability of agricultural residue, cattle dung, press mud and municipal organic waste.
City gas distribution companies will procure CBG in line with the mandatory blending obligation of 3% in FY27, 4% in FY28 and 5% from FY29 onwards in the compressed natural gas transport and domestic piped natural gas segments. The assured-demand framework is intended to improve capacity utilisation and give lenders and developers greater visibility over project revenues.
Eligible greenfield plants will receive capital assistance of up to ₹2 crore per tonne per day of installed CBG capacity. Brownfield projects adding capacity will also qualify. The support will cover core plant equipment, feedstock aggregation, organic manure processing and value-addition infrastructure.
“The ₹23,731-crore GOBARdhan package has the potential to do for India’s biogas sector what the PLI scheme did for solar manufacturing, transforming policy intent into bankable projects,” said Sanjay Ganjoo, director general of the Indian Federation of Green Energy.
India generates nearly 500 million tonnes of agricultural residue annually, much of which continues to be burnt in fields, contributing to air pollution. Ganjoo said feedstock availability was not the principal constraint for the sector.
“The real bottlenecks have been assured offtake, stable pricing, evacuation infrastructure and efficient feedstock aggregation,” he said. With only about 216 CBG plants commissioned against ambitious blending targets, project viability has been affected by insufficient coordination between production facilities and city gas networks, he added.
The scheme will support cluster-based and standalone pipelines connecting CBG plants with trunk pipelines and city gas distribution systems. The infrastructure is expected to lower evacuation costs, expand market access and enable higher utilisation of domestically produced gas.
A dedicated credit-guarantee mechanism will share part of the lending risk for eligible MSME projects, improve access to institutional finance and reduce collateral requirements. The government expects this to widen participation by cooperatives, women entrepreneurs, first-time developers and rural businesses.
The scheme will also establish a CBG Ecosystem Challenge Fund to support district-level feedstock mapping, aggregation infrastructure, technology adoption, manure value addition, capacity building and local project planning.
GOBARdhan consolidates earlier interventions, including the Sustainable Alternative Towards Affordable Transportation initiative, assistance for organic manure, biomass aggregation machinery, pipeline development and financial support under the National Bioenergy Programme. The government said these measures have enabled the commissioning of more than 200 CBG plants.
“Our sector has long argued that biogas needed three things: a remunerative price, assured offtake and capital support. This scheme delivers all three,” said A R Shukla, president of the Indian Biogas Association.
Shukla said the wider impact would be visible in crop residue being collected instead of burnt, additional income for dairy farmers, greater use of fermented organic manure and lower expenditure on imported liquefied natural gas.
“Moving from roughly 300 operating plants towards 5,000 will create lakhs of rural jobs. Waste-to-wealth is no longer a slogan; it is an investable business,” he said.
The government expects the programme to stimulate private investment and rural employment across feedstock collection, transport, plant operations and manure management while strengthening domestic clean-gas supplies.