Cabinet nod to Rs 23,731 cr national biogas scheme to boost clean fuel production

07/08/2026

NEW DELHI, Aug 6: The Union cabinet on Thursday approved a Rs 23,731-crore national scheme to accelerate production of compressed biogas (CBG), betting on agricultural and municipal waste to reduce dependence on imported fossil fuels and strengthen the country's clean energy transition.
The GOBARdhan (Galvanising Organic Bio-Agro Resources Dhan) scheme, to be implemented between fiscal years 2027 and 2036, seeks to increase domestic compressed biogas production nearly ten-fold through assured offtake, administered pricing, capital subsidies, pipeline infrastructure and easier access to finance, the government said.
The programme, with a total outlay of Rs 23,731 crore, will involve the use of agricultural residue, cattle dung, sugar industry waste such as press mud, municipal organic waste and other biomass to produce compressed biogas, which can be blended into CNG used in automobiles.
The scheme builds on existing initiatives, including the Sustainable Alternative Towards Affordable Transportation (SATAT) programme, under which more than 200 compressed biogas plants have already been commissioned, according to the government.
As part of the new framework, city gas distribution companies will procure compressed biogas to meet mandatory blending obligations of 3 per cent in fiscal 2027, 4 per cent in fiscal 2028 and 5 per cent from fiscal 2029 onwards for compressed natural gas used in transport and piped natural gas supplied to households.
The government has also introduced an administered price of Rs 2,110 per million British thermal units (MMBTU) for compressed biogas under a framework designed to provide producers with long-term revenue certainty while keeping consumer prices affordable.
Eligible greenfield projects will receive capital assistance of up to Rs 2 crore per tonne per day of installed compressed biogas capacity, while brownfield expansion projects will also qualify for support.
The scheme also provides funding for pipeline infrastructure linking compressed biogas plants with trunk pipelines and city gas distribution networks, a credit guarantee mechanism for eligible micro, small and medium enterprises, and a dedicated challenge fund to support feedstock aggregation, technology adoption and district-level project development.
The government said the programme is expected to spur private investment, create additional income opportunities for farmers and rural entrepreneurs, improve management of agricultural and municipal waste, expand production of organic manure and lower greenhouse gas emissions.
India has been expanding the use of natural gas as part of its energy transition strategy while seeking to reduce its reliance on imported liquefied natural gas through greater domestic production of renewable gaseous fuels such as compressed biogas.

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