RS 23,731 CRORE CBG BOOST: Modi Govt approves mega ‘GOBARdhan’ scheme

Narendra Modi led Union Cabinet has approved GOBARdhan, the National Circular Bioenergy Scheme, with a total outlay of Rs.23,731 crore. The central government says that GOBARdhan will transform the country’s abundant agricultural residue, cattle dung, press mud, municipal organic waste and other biomass resources into clean fuel, organic manure, rural income and national economic value.

The Scheme will be implemented from FY 2026-27 to FY 2035-36 and will establish Compressed Biogas as a major pillar of India’s future energy mix.

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 Scheme aims to increase domestic Compressed Biogas (CBG) production nearly ten-fold, mobilize large-scale private investment and create a vibrant circular bioeconomy across the country.

Six Growth Engines under GOBARdhan

Assured CBG Offtake

GOBARdhan establishes a dedicated CBG Offtake Assurance framework to provide a reliable and predictable market for producers. Procurement by City Gas Distribution entities will support achievement of the notified CBG Obligation trajectory 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 framework converts the blending obligation into a clear, long-term demand signal for the industry. Consistent implementation across CGD networks will improve project bankability, support capacity utilization and encourage long-term private investment.

Stable CBG Pricing Framework

GOBARdhan introduces a stable administered CBG price of Rs.2,110 per Metric Million British Thermal Unit (MMBTU), supported through a government-backed pricing framework. With a minimum ten-year horizon, the pricing framework will provide producers with durable revenue certainty, commercially attractive returns and a stronger business case for investment and capacity expansion.

Capital Assistance

Eligible greenfield CBG projects will receive capital assistance of up to Rs.2 crore per ton per day (TPD) of installed CBG capacity. The support extends beyond core plant machinery to critical value-chain assets for feedstock aggregation, organic manure processing and value addition. Brownfield projects expanding their production capacity will also be eligible.

Development of Pipeline Infrastructure

The Scheme supports both cluster-based and standalone pipeline infrastructure connecting CBG plants with trunk pipelines and City Gas Distribution networks. Greater pipeline connectivity will reduce evacuation costs, improve reliability, expand market reach and enable higher utilization of domestically produced CBG.

Credit Guarantee Support

A dedicated Credit Guarantee mechanism will strengthen lender confidence and expand the flow of institutional credit to eligible MSME-based CBG projects. By sharing a portion of lending risk, the mechanism will improve access to affordable finance, reduce collateral requirements and support faster project development.

CBG Ecosystem Challenge Fund

GOBARdhan establishes a dedicated CBG Ecosystem Challenge Fund to accelerate district-level implementation and strengthen local value chains across the CBG ecosystem.

The Fund will support feedstock resource assessment and mapping, feedstock aggregation infrastructure, district-level CBG development planning, technology adoption, process improvement, value addition of organic manure, capacity building and stakeholder awareness.

Commenting on the novel announcement, REnergy Dynamics CEO Varun Karad said,  “The scheme addresses some of the key challenges that have held back private investment in the CBG sector, including offtake certainty roadmap, pricing visibility, access to finance, feedstock aggregation and pipeline connectivity. The proposed credit guarantee and capital support mechanisms should significantly improve project bankability and attract greater participation from developers, lenders, infrastructure investors and climate-focused funds.”

GOBARdhan is designed to convert the strong sectoral foundation created over recent years into a nationwide scale-up of CBG. The Scheme is expected to deliver:

• Nearly ten-fold growth in domestic CBG production, creating a new pillar of India’s clean gas economy.
• Greater energy security through increased domestic production of renewable gaseous fuel and lower dependence on imported fossil fuels.
• A new wave of private investment supported by stronger project viability, stable pricing and improved access to institutional finance.
• Stronger rural livelihoods through new income opportunities for farmers, feedstock aggregators, cooperatives and rural entrepreneurs.
• Scientific waste management through productive use of agricultural residue, cattle dung, municipal organic waste and other biomass resources.
• Lower greenhouse gas emissions through replacement of fossil fuels and productive utilization of organic waste.
• A larger organic manure economy through greater production, value addition and utilization of FOM and LFOM.
• Faster and easier project implementation through one national framework, digital governance and simplified institutional arrangements.