Policies like excise waiver can attract Rs 1 lakh cr investment in biogas: IBA

The Indian Biogas Association (IBA) has welcomed the proposed excise duty waiver on biogas blended with compressed natural gas (CNG), stating that a clear and consistent policy framework could unlock investments of up to Rs 1 lakh crore in the sector.

In a statement issued, the industry body said the excise relief announced in the Union Budget 2026 on Compressed Biogas (CBG) blended with CNG marks a significant milestone in India’s clean energy transition and its 2070 net-zero target.

According to IBA, if City Gas Distribution (CGD) networks achieve even a 5 per cent blending level nationwide over the next five years, the country would require nearly 2.5–3 million metric tonnes per annum (MMTPA) of CBG. This alone could translate into investments of Rs 45,000–55,000 crore.

With a stable policy regime and predictable pricing, blending levels could realistically rise to 7–8 per cent by 2032, potentially doubling the investment opportunity to nearly Rs 1 lakh crore, says IBA.

IBA noted that the excise waiver corrects a long-standing anomaly, as renewable CBG was earlier taxed on par with fossil-based CNG. Removing the excise component on the biogas portion of blended fuel makes it more cost-competitive, lowers weighted-average fuel costs for CGD companies, and helps keep consumer prices stable. It also ensures assured offtake and stronger revenue visibility for producers.

India’s CBG potential is estimated at around 60 million tonnes annually from feedstocks such as paddy straw, press mud, municipal solid waste, and cattle dung. The waiver is expected to improve project internal rates of return for 4.8–10 TPD plants, unlocking financing for projects that were previously marginal. IBA added that CBG can cut lifecycle greenhouse gas emissions by 70–90 per cent, with a 10 per cent blend potentially reducing 12–15 million tonnes of CO₂-equivalent emissions annually.