IBA says budgetary support to MSME will bolster biogas in India

The Indian Biogas Association (IBA) has welcomed the proposed increase in MSME financing by the Central Government in the General Budget 2025 and has called it a positive step for the growth of the biogas industry. The official statement of IBA held that with a strong emphasis on manufacturing, green energy, and digital transformation, this Budget lays the foundation for an Aatmanirbhar and Viksit Bharat.

For the emerging biogas and compressed biogas (CBG) sector, the expansion of the MSME Credit Guarantee Scheme is a crucial move, as securing credit on favorable terms has been a persistent challenge. By raising the credit guarantee cover from Rs 5 crore to Rs 10 crore, the scheme facilitates easier access to collateral-free loans, lowering financial barriers for CBG developers.

Additionally, the revised MSME classification criteria, which now allow for investment and turnover limits nearly 2 to 2.5 times higher than before, ensure that even larger-capacity CBG projects can benefit from these incentives.

While the Budget provides substantial support to the MSME sector, the IBA held that specific policy measures for the CBG industry would have further strengthened its growth. To enhance financial viability and contribute to climate goals, the biogas association has urged the Indian government to develop a framework allowing biogas plant operators to trade carbon credits on both domestic and international platforms.

IBA maintains that government policies should include funding for agricultural residue collection, subsidized transportation costs, and the nationwide expansion of anti-crop burning scheme which is currently in Haryana only.

Moreover, IBA has recently advocated for a corporate tax holiday for CBG production as it would further drive investment, generate employment for youth and promote clean energy. The biogas body mentions that although tax incentives may lead to short-term revenue losses, the long-term benefits outweigh the costs. With around 100 commercial CBG plants expected to generate Rs 1,200 crore in FY25, sustained investment in this sector will enhance sustainability, economic growth, and India’s leadership in clean energy.