The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved the GOBARdhan Scheme, India’s National Circular Bioenergy Scheme, with a total outlay of Rs 23,731 crore. The scheme will be implemented from FY 2026-27 to FY 2035-36 and aims to establish Compressed Biogas (CBG) as a major part of India’s energy mix. It seeks to convert agricultural residue, cattle dung, press mud, municipal organic waste and other biomass resources into clean fuel, organic manure and rural income.
The integrated framework includes assured offtake, stable pricing, capital assistance, pipeline connectivity, credit support and technology development to accelerate domestic CBG production. According to the government, the initiative is expected to increase India’s compressed biogas production nearly ten-fold while encouraging private investment and strengthening energy security.
How the GOBARdhan Scheme will expand India’s CBG sector
The Ministry of Petroleum and Natural Gas will administer the GOBARdhan Scheme, which combines several existing initiatives into a single national framework. Earlier government programmes, including the Sustainable Alternative Towards Affordable Transportation (SATAT) initiative, the Market Development Assistance (MDA) Scheme, the Biomass Aggregation Machinery (BAM) Scheme, the Development of Pipeline Infrastructure (DPI) Scheme and Central Financial Assistance under the National Bioenergy Programme, helped establish the sector’s foundation.
These initiatives have already enabled the commissioning of more than 200 CBG plants across the country. They also created production and offtake systems, strengthened the organic manure value chain and demonstrated the viability of compressed biogas using different feedstocks and geographical locations. The new framework is expected to improve project economics and provide greater certainty to investors, lenders and developers.
The first component of the scheme establishes an assured CBG offtake mechanism. Procurement by City Gas Distribution entities will support the notified CBG obligation targets of 3% in FY 2026-27, 4% in FY 2027-28 and 5% from FY 2028-29 onwards in the CNG transport and PNG domestic segments. The government said this framework will create a reliable demand signal and improve project bankability.
The second component introduces a stable administered CBG price of Rs 2,110 per Metric Million British Thermal Unit (MMBTU). Supported by a government-backed pricing framework, the mechanism is designed to provide long-term revenue visibility while balancing consumer affordability through government support and market-based cost sharing. The pricing framework will remain in place for at least ten years.
The third component offers capital assistance of up to Rs 2 crore per ton per day (TPD) of installed capacity for eligible greenfield projects. The assistance also covers feedstock aggregation, organic manure processing and value-addition infrastructure, while brownfield projects expanding their capacity will also qualify. The fourth component focuses on developing cluster-based and standalone pipeline infrastructure to connect CBG plants with trunk pipelines and City Gas Distribution networks, reducing evacuation costs and expanding market access.
The fifth component creates a dedicated credit guarantee mechanism for eligible MSME-based projects. The government said the facility will improve access to institutional finance, reduce collateral requirements and encourage participation by MSMEs, women entrepreneurs and first-time developers. The sixth component establishes a CBG Ecosystem Challenge Fund to support feedstock mapping, district-level planning, technology adoption, organic manure value addition, capacity building and stakeholder awareness.
The government expects the GOBARdhan Scheme to generate nearly ten-fold growth in domestic compressed biogas production, strengthen energy security and reduce dependence on imported fossil fuels. The programme is also expected to create new income opportunities for farmers, feedstock suppliers, cooperatives and rural entrepreneurs while promoting scientific waste management and reducing greenhouse gas emissions. The scheme aims to support a larger organic manure economy and simplify project implementation through a single national framework and digital governance systems.
