Cabinet Approves INR 23,731 Crore GOBARdhan Scheme to Boost India's CBG Production
The Union Cabinet has approved the INR 23,731 crore GOBARdhan National Circular Bioenergy Scheme for implementation from FY 2026-27 to FY 2035-36, targeting nearly ten-fold growth in domestic compressed biogas production through an integrated policy framework.
August 07, 2026. By Mrinmoy Dey
The scheme, to be implemented from FY 2026-27 to FY 2035-36, aims to transform agricultural residue, cattle dung, press mud, municipal organic waste and other biomass resources into compressed biogas (CBG), organic manure and rural income, while establishing CBG as a major component of India's clean energy mix.
Administered by the Ministry of Petroleum and Natural Gas, the scheme seeks to increase domestic CBG production nearly ten-fold by providing an integrated framework covering the entire value chain. It brings together assured offtake, stable pricing, capital assistance, pipeline infrastructure, credit support and technology development to improve project viability, attract private investment and accelerate the growth of a circular bioeconomy.
The government said that GOBARdhan builds on initiatives such as the Sustainable Alternative Towards Affordable Transportation (SATAT) programme, the Market Development Assistance (MDA) scheme, the Biomass Aggregation Machinery (BAM) scheme, the Development of Pipeline Infrastructure (DPI) scheme and Central Financial Assistance (CFA) under the National Bioenergy Programme. These initiatives have enabled the commissioning of more than 200 CBG plants across the country, laying the foundation for scaling up the sector.
Under the scheme, City Gas Distribution (CGD) entities will procure CBG to meet the notified blending obligation, with targets of 3 percent in FY 2026-27, 4 percent in FY 2027-28 and 5 percent from FY 2028-29 onwards for CNG (Transport) and PNG (Domestic) segments. The Cabinet has also approved a stable administered CBG price of INR 2,110 per MMBTU, backed by a government-supported pricing framework with a minimum ten-year horizon to provide long-term revenue visibility for producers.
Eligible greenfield CBG projects will receive capital assistance of up to INR 2 crore per tonne per day (TPD) of installed capacity, while brownfield projects expanding production capacity will also qualify for support. The scheme additionally provides for the development of pipeline connectivity between CBG plants and gas distribution networks, a dedicated credit guarantee mechanism for MSME-based projects and a CBG Ecosystem Challenge Fund to support feedstock assessment, district-level planning, technology adoption, organic manure value addition and capacity building.
According to the government, the scheme is expected to strengthen India's energy security by increasing domestic renewable gas production and reducing dependence on imported fossil fuels. It is also projected to attract large-scale private investment, create new livelihood opportunities for farmers, cooperatives and rural entrepreneurs, improve scientific waste management, expand the organic manure economy and lower greenhouse gas emissions through the productive utilisation of organic waste. The integrated national framework is also expected to simplify project implementation and support the large-scale expansion of India's circular bioenergy sector.
Commenting on the Union Cabinet's approval of GOBARdhan scheme, Varun Karad, Co-founder and CEO, Renergy Dynamics, said, “GOBARdhan could be the inflection point that moves India’s CBG sector from project announcements to actual execution. Today, there are nearly 1,900 CBG projects registered on the government portal, but only 216 have been commissioned; most of them are small-scale. That tells us that the constraint is not entrepreneurial interest. It is the ability to make projects bankable and execute them. The new framework directly attacks that problem through assured offtake, a 10-year pricing framework, capital assistance, pipeline connectivity and credit guarantees. The most significant aspect of GOBARdhan is not just the INR 23,731 crore outlay, it is that CBG is now beginning to look like a bankable infrastructure asset.”
“India needs to add around 1,000 TPD of CBG capacity every year to reach about 4,000 TPD by FY29, requiring nearly INR 24,000 crore of investment in just three years. With this policy support, I believe we could see at least 50,000 crore of new project investment in CBG by 2030, provided the industry can solve the issues of reliable feedstock aggregation and consistently high plant utilisation. The winners in this next phase will be those who can build plants at scale and can integrate feedstock, technology, EPC and operations to deliver predictable gas output,” added Karad.
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