The Union Cabinet has approved GOBARdhan, the National Circular Bioenergy Scheme, with an outlay of Rs 23,731 crore, in a major push to scale up compressed biogas (CBG) production and turn India's agricultural and organic waste into a domestic energy resource.
Approved on Thursday, the scheme will run from FY2026-27 to FY2035-36 and aims to increase India's domestic CBG production nearly ten-fold. The government expects the programme to strengthen energy security, attract private investment and create new income opportunities across rural India.
The scheme will be administered by the Ministry of Petroleum and Natural Gas and brings several existing CBG initiatives under a single framework.
Why Is The Government Betting On Compressed Biogas?
India has a large and largely underutilised supply of agricultural residue, cattle dung, press mud, municipal organic waste and other biomass. GOBARdhan seeks to convert this waste into CBG, organic manure and additional rural economic activity.
CBG has the same chemical properties as natural gas and can be used within India's existing gas ecosystem. That makes it particularly relevant as the country seeks to expand gas consumption while reducing dependence on imported fossil fuels.
The government said more than 200 CBG plants have already been commissioned through earlier programmes, including the Sustainable Alternative Towards Affordable Transportation (SATAT) initiative, the Market Development Assistance scheme for organic manure, the Biomass Aggregation Machinery scheme and financial assistance under the National Bioenergy Programme.
GOBARdhan is intended to take that foundation to a much larger scale.
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How Will The Rs 23,731 Crore Scheme Work?
The programme is built around six major interventions designed to address some of the biggest constraints facing CBG projects: demand certainty, pricing, upfront capital requirements, infrastructure, financing and local ecosystem development.
One of the biggest changes is the creation of a dedicated CBG Offtake Assurance framework.
City Gas Distribution entities will procure CBG to support the government's notified CBG blending obligation in the CNG transport and PNG domestic segments. The obligation will stand at 3% in FY2026-27, 4% in FY2027-28 and 5% from FY2028-29 onwards.
The objective is to give producers greater visibility over future demand and make projects easier to finance.
GOBARdhan also introduces an administered CBG price of Rs 2,110 per MMBTU, supported by a government-backed pricing framework.
The pricing mechanism will operate over a minimum 10-year horizon, providing producers with greater revenue visibility and potentially improving the economics of new projects.
This is important because CBG projects require significant upfront investment, while their returns depend on both reliable feedstock and predictable offtake.
Eligible greenfield CBG projects will receive capital assistance of up to Rs 2 crore per tonne per day (TPD) of installed CBG capacity.
The support will cover not only core plant equipment but also critical assets linked to feedstock aggregation, organic manure processing and value addition.
Brownfield projects expanding their existing production capacity will also qualify.
The government expects this assistance to reduce the initial capital burden and encourage participation from private developers, MSMEs, cooperatives and rural entrepreneurs.
Pipeline And Credit Support To Address Industry Bottlenecks
Infrastructure has been another constraint for the CBG industry. Under GOBARdhan, the government will support both cluster-based and standalone pipelines connecting CBG plants with trunk pipelines and City Gas Distribution networks.
Better connectivity should reduce evacuation costs and allow producers to reach larger markets.
The scheme will also establish a credit guarantee mechanism for eligible MSME-based CBG projects. By sharing part of the lending risk, the government aims to improve access to institutional finance and reduce dependence on collateral.
The measure could be particularly relevant for smaller developers, women entrepreneurs and first-time project promoters.
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District-Level Push To Build The CBG Ecosystem
The sixth component, the CBG Ecosystem Challenge Fund, will focus on developing the supply chain at the district level.
The fund will support feedstock mapping, aggregation infrastructure, district-level CBG plans, technology adoption, process improvements, organic manure value addition and capacity building.
This addresses a fundamental challenge for the sector: a CBG plant can only operate efficiently if it has a reliable supply of biomass within an economically viable distance.
Can GOBARdhan Deliver On Its 10x Target?
The scale of the target makes implementation critical.
The government has already established a base of more than 200 commissioned CBG plants. But moving from that foundation to a nationally scaled industry will depend on whether projects can secure feedstock consistently, achieve financial closure, connect to gas networks and operate at commercially viable capacity.
GOBARdhan attempts to address each of these issues through a combination of assured offtake, stable pricing, capital assistance, pipeline connectivity, credit guarantees and district-level planning.
If these measures work as intended, the Rs 23,731 crore scheme could transform CBG from a relatively small alternative-fuel segment into a significant component of India's energy mix.
The bigger test, however, will be execution. The government's 10-year implementation window through FY2035-36 gives the sector time to build capacity, but the success of GOBARdhan will ultimately be measured by how much organic waste is converted into commercially viable clean energy and whether the promised ten-fold expansion in CBG production actually materialises.
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