India has approved a new national scheme aimed at significantly expanding compressed biogas (CBG) production by creating a more predictable policy and financial framework for the sector over the next decade.

The Union Cabinet has cleared the GOBARdhan (Galvanizing Organic Bio-Agro Resources Dhan) National Circular Bioenergy Scheme, with an outlay of ₹23,731 crore. Scheduled to run from FY2026-27 to FY2035-36, the programme seeks to integrate existing support measures under a single framework to accelerate investment in compressed biogas projects while strengthening the country's waste-to-energy ecosystem.

The scheme is designed to address several long-standing challenges faced by CBG developers, including uncertain demand, pricing volatility, financing constraints and inadequate evacuation infrastructure. By combining assured offtake, administered pricing, capital support, pipeline connectivity and credit guarantees, the government hopes to improve project viability and attract greater private participation.

The announcement comes as India looks to diversify its clean energy portfolio while improving the management of agricultural residues, cattle dung, municipal organic waste, sugar industry press mud and other biomass resources.

Integrated approach

Unlike earlier initiatives that focused on individual aspects of the value chain, GOBARdhan brings together multiple policy interventions under one umbrella. The Ministry of Petroleum and Natural Gas will administer the programme, coordinating support across production, transportation, financing and market development.

The government said the integrated framework is expected to help increase domestic CBG production by nearly ten times over the implementation period.

India has spent the past several years laying the groundwork for a domestic biogas industry through programmes such as the Sustainable Alternative Towards Affordable Transportation (SATAT) initiative, the Market Development Assistance scheme for organic manure, the Biomass Aggregation Machinery Scheme, the Development of Pipeline Infrastructure scheme and financial assistance under the National Bioenergy Programme.

According to the government, these initiatives have supported the commissioning of more than 200 CBG plants and established initial production and offtake mechanisms. The new programme seeks to build on that foundation by creating greater certainty for developers and investors.

Industry backs integrated policy framework

The announcement has drawn support from India's oil marketing companies, which view compressed biogas as an important component of the country's evolving clean energy mix.

The Linkedin page of the Bharat Petroleum Corporation Limited (BPCL) features a comment from its Chairman and Managing Director Sanjay Khanna. He has described the scheme as a major step towards building a circular bioenergy ecosystem by converting agricultural and organic waste into valuable resources.

"We stand at the threshold of a green revolution, one that begins not in distant laboratories but in our farms, villages, dairies, markets and homes," Khanna said. He added that the initiative has the potential to transform cattle dung, crop residue, press mud and organic waste into clean compressed biogas and organic manure while creating new economic opportunities in rural India.

According to Khanna, each CBG plant could become a centre of rural enterprise, generating income for farmers, creating local employment and contributing to India's energy security. He also called for coordinated efforts from government, industry, financial institutions, technology providers and local communities to accelerate implementation and build robust feedstock networks and reliable markets.

Echoing similar sentiments, A. S. Sahney, Chairman of Indian Oil Corporation Limited (IndianOil), has said on the company's Linkedin page, that the integrated framework addresses several of the structural issues that have constrained growth of the compressed biogas sector.

"The integrated framework provides the right ecosystem for rapid scaling of India's CBG sector through assured offtake, stable pricing, capital incentives, pipeline connectivity and easier access to finance," Sahney said.

He added that the scheme could increase domestic CBG production nearly ten-fold, helping strengthen India's energy security while supporting farmers, promoting waste-to-wealth initiatives and advancing the country's circular economy objectives.

Assured demand

One of the most significant features of the scheme is the introduction of an assured offtake framework.

City Gas Distribution (CGD) entities will procure compressed biogas to meet the government's notified blending obligations in transport and domestic gas networks. The blending requirement has been set at 3% in FY2026-27, increasing to 4% in FY2027-28 and 5% from FY2028-29 onwards.

Industry stakeholders have often pointed to uncertain demand as a key obstacle to financing new projects. A guaranteed procurement mechanism could improve project bankability and provide developers with greater confidence to invest in additional capacity.

Stable pricing

The government has also introduced an administered price of ₹2,110 per MMBTU for compressed biogas under a long-term pricing framework.

Officials said the mechanism is intended to provide revenue certainty for producers while balancing affordability for end users through government support and market-based cost sharing.

Stable pricing has been a longstanding demand from project developers, who have argued that fluctuating returns have made it difficult to secure financing for new plants.

Capital and financial support

To reduce upfront investment costs, eligible greenfield projects will receive capital assistance of up to ₹2 crore per tonne per day (TPD) of installed CBG capacity.

The support will extend beyond core plant equipment to include feedstock aggregation infrastructure, organic manure processing facilities and value-addition activities. Existing plants expanding their production capacity will also be eligible.

The scheme further proposes a dedicated credit guarantee mechanism for MSME-based projects to improve access to institutional finance. By sharing part of the lending risk, the government expects to encourage greater participation from smaller developers, cooperatives, rural entrepreneurs and first-time investors.

Pipeline connectivity

Another component focuses on strengthening pipeline infrastructure connecting CBG plants with trunk pipelines and City Gas Distribution networks.

Limited evacuation infrastructure has often restricted market access for producers located away from existing gas networks. The government expects new pipeline connectivity to reduce transportation costs, improve supply reliability and support higher utilisation of domestically produced compressed biogas.

District-level ecosystem development

The scheme also establishes a dedicated CBG Ecosystem Challenge Fund, which will support district-level planning and ecosystem development.

Funding will be available for feedstock assessment, aggregation infrastructure, technology adoption, capacity building, organic manure value addition and stakeholder awareness programmes.

Officials said strengthening local supply chains will be critical to ensuring adequate feedstock availability and improving operational efficiency across projects.

Waste management and rural economy

Beyond energy production, the programme aims to strengthen the circular use of organic waste streams.

India generates substantial quantities of agricultural residue, cattle dung, municipal organic waste and agro-industrial biomass every year, much of which remains underutilised or is disposed of through environmentally damaging practices such as open burning.

Converting these materials into compressed biogas and organic manure could help reduce waste while creating additional income opportunities for farmers, feedstock suppliers, transport operators and rural enterprises.

The government also expects increased production of fermented organic manure (FOM) and liquid fermented organic manure (LFOM), supporting soil health and reducing dependence on chemical fertilisers.

Industry observers note that the scheme could provide fresh momentum to India's waste-to-energy sector by creating a more predictable policy environment.

Compressed biogas is chemically equivalent to natural gas and can be injected into existing gas distribution infrastructure, allowing renewable gas to be used across transport, domestic and industrial applications without major changes to end-use systems.