Daijiworld Media Network - New Delhi
New Delhi, Aug 6: The Union Cabinet, chaired by Prime Minister Narendra Modi, on Thursday approved the Rs 23,731 crore GOBARdhan scheme to convert agricultural residue, cattle dung and municipal organic waste into clean fuel and organic manure, aiming to make compressed biogas (CBG) a key pillar of India's future energy mix.
The circular bioenergy scheme will be implemented from 2026-27 to 2035-36 and seeks to significantly expand the country's CBG production while promoting sustainable waste management and rural employment.
According to an official statement, the scheme will utilise agricultural residue, cattle dung, press mud, municipal organic waste and other biomass resources.
"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 Cabinet said, adding that the scheme aims to increase CBG production tenfold and attract substantial private investment in the circular bioeconomy.
The Centre has already been implementing initiatives such as the Sustainable Alternative Towards Affordable Transportation (SATAT) programme, the Market Development Assistance (MDA) Scheme for organic manure, the Biomass Aggregation Machinery (BAM) Scheme, the Development of Pipeline Infrastructure (DPI) Scheme and Central Financial Assistance (CFA) for CBG plants under the National Bioenergy Programme.
These initiatives have facilitated the commissioning of more than 200 CBG plants, established production and offtake systems, strengthened the organic manure value chain and demonstrated the viability of CBG across different feedstocks and regions.
The Cabinet said the GOBARdhan scheme will integrate the entire CBG value chain under a single platform administered by the Ministry of Petroleum and Natural Gas, enabling faster implementation, stronger project economics and greater certainty for investors, lenders and developers.
CBG is chemically equivalent to natural gas and can be seamlessly integrated into India's expanding gas infrastructure. Besides generating renewable fuel, each CBG plant creates a local circular economy by utilising agricultural waste and organic resources while generating employment in feedstock collection, transportation, plant operations and organic manure production. The scheme is also expected to improve waste management and reduce greenhouse gas emissions.
A key feature of the scheme is the introduction of a government-backed administered price of Rs 2,110 per metric million British thermal unit (MMBTU) for CBG, providing long-term revenue certainty for producers.
The government has identified six key growth drivers under the scheme: assured CBG offtake, a stable pricing framework, capital assistance, pipeline infrastructure development, credit guarantee support and a dedicated CBG ecosystem challenge fund.
A dedicated offtake assurance mechanism will support procurement by City Gas Distribution entities to achieve the notified CBG blending obligations of 3 per cent in 2026-27, 4 per cent in 2027-28 and 5 per cent from 2028-29 onwards in the CNG (transport) and PNG (domestic) segments.
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 plant machinery but also feedstock aggregation, organic manure processing and value addition infrastructure. Brownfield projects expanding production capacity will also be eligible.
To improve access to finance, the scheme will introduce a dedicated credit guarantee mechanism for eligible MSME-based CBG projects. By sharing a portion of lending risk, the mechanism is expected to enhance lender confidence, reduce collateral requirements and accelerate project development.
The dedicated CBG Challenge Fund will support feedstock resource mapping, aggregation infrastructure, district-level planning, technology adoption, process improvements, organic manure value addition and capacity building.
Welcoming the initiative, Sanjay Ganjoo, Director General of the Indian Federation of Green Energy, said the scheme has the potential to transform India's biogas sector in the same way the Production-Linked Incentive (PLI) scheme accelerated solar manufacturing.
He said India's biggest challenges have not been feedstock availability but assured offtake, stable pricing, evacuation infrastructure and efficient feedstock aggregation.
"By supporting both production and distribution infrastructure, the government has addressed the sector's most critical challenges," Ganjoo said, adding that assured offtake, improved pipeline connectivity and organised procurement of biomass such as paddy straw and press mud would strengthen project viability, improve investor confidence and create new rural value chains through greater farmer participation.