India has approved ₹23,731 crore national programme to accelerate compressed biogas (CBG) production, positioning organic waste, agricultural residues and cattle dung as increasingly important sources of domestic clean energy.
The Union Cabinet, chaired by Prime Minister Narendra Modi, approved GOBARdhan — the National Circular Bioenergy Scheme — as an integrated framework covering assured CBG demand, stable pricing, capital assistance, pipeline connectivity, credit guarantees and technology and ecosystem development.
Running from FY 2026-27 through FY 2035-36, GOBARdhan aims to deliver nearly ten-fold growth in domestic CBG production, attract large-scale private investment and expand India’s circular bioeconomy.
The initiative could have significant implications for India’s energy security because CBG can substitute for conventional natural gas across transport, households, industry and commercial applications. At the same time, converting agricultural residue, cattle dung, press mud, municipal organic waste and other biomass into fuel could create additional income opportunities for farmers and rural businesses.
India Builds on More Than 200 CBG Plants
GOBARdhan builds on several existing government programmes, including the Sustainable Alternative Towards Affordable Transportation (SATAT) initiative, Market Development Assistance Scheme for organic manure, Biomass Aggregation Machinery Scheme, Development of Pipeline Infrastructure Scheme and Central Financial Assistance for CBG plants under the National Bioenergy Programme.
These initiatives have already supported the commissioning of more than 200 CBG plants across India, while establishing production and offtake systems and developing the organic manure value chain.
The new scheme, administered by the Ministry of Petroleum and Natural Gas, brings different elements of the CBG value chain under a unified national framework designed to improve project economics and provide greater certainty to investors, developers and lenders.
CBG Obligation Rises From 3 Percent to 5 Percent
Assured demand is one of the most important elements of the ₹23,731 crore programme.
Under the CBG Offtake Assurance framework, procurement by City Gas Distribution companies will support India’s notified CBG Obligation of 3 percent in FY 2026-27, 4 percent in FY 2027-28 and 5 percent from FY 2028-29 onwards in the CNG transport and domestic PNG segments.
The long-term demand framework is intended to improve capacity utilisation and project bankability while encouraging private investment in new CBG capacity.
GOBARdhan Sets CBG Price at ₹2,110 per MMBTU
Pricing certainty is another major feature of the programme. GOBARdhan introduces an administered CBG price of ₹2,110 per Metric Million British Thermal Unit (MMBTU) through a government-backed pricing framework.
The mechanism combines government support with market-based cost sharing to provide producers with revenue visibility while protecting consumer affordability.
Importantly for investors, the pricing framework will have a minimum 10-year horizon, providing longer-term certainty for investment decisions and capacity expansion.
CBG Projects Eligible for Capital Assistance
The government will provide eligible greenfield projects with capital assistance of up to ₹2 crore per ton per day (TPD) of installed CBG capacity.
Financial assistance will extend beyond the primary CBG production facility to infrastructure required for feedstock aggregation, organic manure processing and value addition. Brownfield projects that expand their CBG production capacity will also qualify for assistance.
The support is expected to reduce upfront capital requirements and make CBG projects more accessible to private developers, MSMEs, cooperatives and rural entrepreneurs.
Pipeline Infrastructure to Expand CBG Market Access
GOBARdhan will support cluster-based as well as standalone pipeline infrastructure connecting CBG plants with trunk gas pipelines and City Gas Distribution networks.
CBG is chemically equivalent to natural gas, allowing the renewable fuel to be integrated into India’s existing gas infrastructure. Improved connectivity is expected to lower evacuation costs, increase reliability and enable producers to reach a larger market.
The pipeline component could become increasingly important as production scales up and CBG moves from relatively local projects toward a nationally interconnected clean-gas industry.
Credit Guarantee to Support MSME CBG Projects
Access to financing will be addressed through a dedicated Credit Guarantee mechanism for eligible MSME-based CBG projects.
By sharing part of lenders’ risk, the programme aims to improve institutional credit availability, reduce collateral requirements and accelerate project development.
The government expects the mechanism to increase participation from MSMEs, women entrepreneurs and first-time project developers.
CBG Ecosystem Challenge Fund Targets District-Level Growth
A dedicated CBG Ecosystem Challenge Fund will support development of the industry at the district level.
The fund will cover feedstock resource assessment and mapping, aggregation infrastructure, district-level CBG planning, adoption of new technologies, process improvements, organic manure value addition, capacity building and stakeholder awareness.
This element is particularly important because a CBG plant depends on a reliable supply of agricultural residue, cattle dung or other organic feedstocks. Building efficient local collection and transportation systems will therefore be critical to maintaining plant utilisation as the sector expands.
GOBARdhan Could Strengthen India’s Rural Bioeconomy
Beyond clean-energy production, the scheme is designed to create local economic ecosystems around CBG plants.
Farmers could generate additional income by supplying agricultural residue and other biomass, while opportunities are expected across feedstock aggregation, transportation, plant operation and organic manure production.
CBG development can also support scientific management of cattle dung, municipal organic waste and agricultural residue while reducing greenhouse gas emissions through fossil-fuel substitution and productive utilisation of organic waste.
The programme is also expected to expand the production, value addition and use of Fermented Organic Manure (FOM) and Liquid Fermented Organic Manure (LFOM).
World Biogas Association Backs India’s CBG Expansion
The World Biogas Association (WBA) has welcomed the GOBARdhan programme, saying the combination of assured offtake, stable pricing, capital support, pipeline connectivity, financing and ecosystem development addresses several barriers that have constrained the expansion of India’s CBG industry.
WBA said the next stage of growth should focus on reliable plant operation, robust feedstock systems, high methane recovery, safety, environmental performance and effective digestate utilisation.
The association plans to support India’s expanding sector through its Making Biogas Happen programme, including international regulatory and certification frameworks, technical capacity building, regulatory benchmarking and demonstration projects.
The development of India’s CBG market will also be discussed at the World Biogas Association INDIA Congress 2026, scheduled for October 8-9 in New Delhi, bringing together government and industry stakeholders.
With an investment outlay of ₹23,731 crore, implementation spanning FY 2026-27 to FY 2035-36, an administered CBG price of ₹2,110 per MMBTU, capital assistance of up to ₹2 crore per TPD, and blending obligations rising from 3 percent to 5 percent, GOBARdhan represents one of India’s most comprehensive attempts to build a large-scale circular bioenergy economy.
If implementation delivers the targeted nearly ten-fold increase in CBG production, the programme could simultaneously strengthen domestic energy security, attract clean-energy investment, generate new rural income streams and turn India’s organic waste resources into a larger source of renewable fuel and economic value.
