Cabinet Approves ₹23,731 Crore GOBARdhan Scheme to Scale Up Compressed Biogas Production
- MGMMTeam
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The Union Cabinet has approved a major national programme to accelerate the production of compressed biogas across India. Known as the GOBARdhan scheme, or the National Circular Bioenergy Scheme, the initiative carries an outlay of ₹23,731 crore and will be implemented from the financial year 2026-27 to 2035-36. Administered by the Ministry of Petroleum and Natural Gas, the scheme seeks to convert agricultural residue, cattle dung, press mud, municipal organic waste and other biomass into clean fuel, organic manure and additional sources of rural income. Its broader goal is to establish compressed biogas as a meaningful component of India’s energy mix while strengthening energy security and promoting a circular bioeconomy.
Background and Current Progress
India has been working for several years to develop a domestic compressed biogas sector. Earlier efforts under programmes such as the Sustainable Alternative Towards Affordable Transportation initiative, market development assistance for organic manure, biomass aggregation support and pipeline infrastructure schemes have already led to the commissioning of more than 200 plants. By late July 2026, official figures indicated that around 217 plants were operational, with a combined capacity of approximately 1,773 tonnes per day, while several hundred additional projects were under construction.
Blending of compressed biogas into the national gas network has also begun to take shape. In the financial year 2025-26, India achieved a blending rate of 1.05 per cent in the compressed natural gas transport and piped natural gas domestic segments, slightly exceeding the one per cent target set for that year. Procurement volumes by oil and gas marketing companies more than doubled compared with the previous year, signalling growing market uptake.
Objectives of the New Scheme
The GOBARdhan scheme is designed to expand domestic compressed biogas production nearly ten-fold over the next decade. By making greater use of widely available organic waste, the programme aims to reduce reliance on imported natural gas, which currently accounts for roughly half of India’s consumption. Officials estimate that successful implementation could displace around ten million metric tonnes of fossil fuel use, generate foreign exchange savings of more than ₹40,000 crore, and contribute approximately ₹75,000 crore to the domestic economy through the growth of a larger biogas industry. Additional benefits include better management of agricultural residue, reduced open burning of crop waste, production of organic manure, and the creation of employment opportunities in rural areas.
Key Features of the Framework
The scheme rests on an integrated set of measures intended to remove long-standing barriers related to demand certainty, pricing, financing and infrastructure. City gas distribution companies will be required to procure compressed biogas in order to meet a mandatory blending obligation. This obligation rises to three per cent in 2026-27, four per cent in 2027-28 and five per cent from 2028-29 onwards for both transport and domestic gas segments. The arrangement is expected to provide producers with a clear and predictable long-term market, thereby improving the bankability of projects and encouraging private investment.
A government-backed administered price of ₹2,110 per million British thermal units has been established, supported by a pricing framework with a minimum ten-year horizon. This structure is intended to give producers greater revenue visibility while protecting consumer affordability through a combination of government support and market-based cost sharing.
Capital assistance of up to ₹2 crore per tonne per day of installed capacity will be available for eligible new greenfield projects. Existing plants that expand their capacity will also qualify for support. The assistance covers core plant equipment as well as infrastructure for feedstock collection and organic manure processing. Complementary measures include financial support for pipeline connections linking plants to trunk lines and city gas networks, a dedicated credit guarantee facility for eligible micro, small and medium enterprise projects, and a challenge fund to promote district-level planning, technology adoption, capacity building and awareness among stakeholders.
Expected Wider Impact
Beyond energy production, the scheme addresses several interconnected national priorities. Greater utilisation of crop residue and organic waste can help mitigate air pollution caused by stubble burning. The production of fermented organic manure offers farmers an additional income stream and a soil-friendly alternative to chemical fertilisers. Employment opportunities are expected to arise across feedstock aggregation, plant operations, logistics and manure processing, particularly in rural regions. At a strategic level, higher domestic output of compressed biogas is seen as a practical contribution to energy security in an environment where global supplies of liquefied natural gas remain subject to geopolitical uncertainties.
The MGMM Outlook
The Union Cabinet’s approval of the ₹23,731 crore GOBARdhan (National Circular Bioenergy) Scheme reflects a strong commitment to building a cleaner, self-reliant and sustainable energy ecosystem in India. By converting agricultural residue, cattle dung, municipal organic waste and other biomass into compressed biogas, the initiative not only promotes renewable energy but also addresses long-standing challenges such as crop residue burning, waste management and dependence on imported natural gas. With mandatory compressed biogas blending, long-term pricing assurance, capital support and improved infrastructure, the scheme creates a stable environment that can encourage greater private investment while strengthening India's circular bioeconomy.
The programme also has the potential to transform rural India by generating new income opportunities for farmers, creating employment across the bioenergy value chain and increasing the use of organic manure for sustainable agriculture. As India continues to expand its clean energy capacity, initiatives like GOBARdhan demonstrate how economic growth, environmental protection and energy security can advance together. If implemented effectively through coordinated efforts between the Centre, states and industry, the scheme can become a significant milestone in India's journey towards a greener economy and greater energy independence.
(Sources: Business Standard, The Financial Express, LiveMint)
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