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Informist, Thursday, Aug. 6, 2026

 

--Cabinet clears INR 237.31 bln for Gobardhan Scheme for biogas production

 

NEW DELHI – The Union Cabinet Thursday approved INR 237.31 billion for the GOBARdhan Scheme – the National Circular Bioenergy Scheme – to boost production and distribution of biogas. The scheme will "transform the country's abundant agricultural residue, cattle dung, press mud, municipal organic waste and other biomass resources into clean fuel, organic manure, rural income and national economic value," an official press release said. 

 

The scheme aims to increase domestic compressed biogas production nearly 10-fold, mobilise large-scale private investment and create a vibrant circular bioeconomy across the country. It will be implemented from 2026-27 (Apr-Mar) to FY36 and will establish compressed biogas as a major pillar of India's energy mix.

 

"Through assured demand, remunerative and stable pricing, capital assistance, pipeline infrastructure, credit support and technology development, GOBARdhan will provide the strong and predictable framework required to take India's CBG sector to national scale," the release said. 

 

According to Information and Broadcasting Minister Ashwani Vaishnaw, the West Asia crisis exposed India's energy vulnerabilities. India imports 50% of its natural gas consumption and this scheme is part of the government's initiative to bring down energy imports. "Atmanirbharta (self-reliance) is no longer an option. It is a necessity," he said. 

 

Under the first pillar of the scheme – assured framework – the government will ensure procurement of biogas by city gas distribution entities to achieve the notified compressed biogas obligation trajectory of 3% in FY27, 4% in FY28 and 5% from FY29 onwards in the compressed natural gas and piped natural gas segments. "The framework converts the blending obligation into a clear, long-term demand signal for the industry. Consistent implementation across CGD networks will improve project bankability, support capacity utilisation and encourage long-term private investment," the release said.

 

Through the second pillar – stable biogas pricing framework – the government introduced an administered price of INR 2,110 per metric million British thermal unit. The framework provides long-term revenue visibility while protecting consumer affordability through a combination of government support and a market-based cost-sharing mechanism. "With a minimum 10-year horizon, the pricing framework will provide producers with durable revenue certainty, commercially attractive returns and a stronger business case for investment and capacity expansion," the release said. 

 

The third pillar ensures eligible greenfield compressed biogas projects receive capital assistance of up to INR 20 million per tonne per day of installed gas capacity. "The support extends beyond core plant machinery to critical value-chain assets for feedstock aggregation, organic manure processing and value addition," the release said. Brownfield projects expanding their production capacity will also be eligible.

 

The fourth pillar of the scheme supports both cluster-based and standalone pipeline infrastructure connecting compressed biogas plants with trunk pipelines and city gas distribution networks. "Greater pipeline connectivity will reduce evacuation costs, improve reliability, expand market reach and enable higher utilisation of domestically produced CBG."

 

The government, through the fifth pillar of the scheme, set up a dedicated credit guarantee mechanism to strengthen lender confidence and expand the flow of institutional credit to eligible small-scale compressed biogas projects. "By sharing a portion of lending risk, the mechanism will improve access to affordable finance, reduce collateral requirements and support faster project development," the release said. "This will widen participation by MSMEs, women entrepreneurs and first-time developers, helping build a broad, competitive and entrepreneurial CBG industry," it added. 

 

Under the sixth and final pillar, the government established a dedicated 'CBG Ecosystem Challenge Fund' to accelerate district-level implementation and strengthening of local value chains across the compressed biogas ecosystem.         

 

The scheme will ensure a new wave of private investment, stronger rural livelihoods, scientific waste management, and lower greenhouse gas emissions. Through this scheme, the government will be able to save INR 400 billion as foreign exchange reserves over the next decade and the new industry will add INR 750 billion to India's GDP, Vaishnaw said.  End

 

Reported by Priyasmita Dutta

Edited by Saji George Titus

 

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