India Targets Tenfold Compressed Biogas Growth Under New National Scheme
India has set a floor price and a rising blending mandate for compressed biogas a decade out, turning a waste-management technology into a bankable gas-market asset.
The Union Cabinet has approved GOBARdhan, a Rs 23,731 crore (about $2.7 billion) national scheme to grow India's compressed biogas production nearly tenfold over ten years, backed by a blending mandate rising to 5% by FY2028-29 and a government-guaranteed price of Rs 2,110 per MMBTU.
The scheme builds on a decade of narrower biogas programmes. SATAT, the Market Development Assistance scheme, pipeline-infrastructure support and capital assistance under the National Bioenergy Programme helped commission roughly 200 CBG plants, but developers lacked the combination of guaranteed demand and financing tools needed to scale past pilot volumes. GOBARdhan, administered by the Ministry of Petroleum and Natural Gas, folds those separate levers into one ten-year framework running from FY2026-27 to FY2035-36.
The timing matters because compressed biogas is chemically interchangeable with natural gas and can move through India's existing gas pipelines and city distribution networks. As gas demand rises across transport, households and industry, a domestically produced substitute reduces reliance on imported fuel, provided the demand for it is contractually guaranteed rather than left to voluntary uptake.
Blending Mandate and Rs 2,110/MMBTU Floor Price Anchor Demand
City gas distribution entities must meet a CBG obligation trajectory of 3% in FY2026-27, 4% in FY2027-28 and 5% from FY2028-29 onward, across both compressed natural gas for transport and piped natural gas for households. That obligation is paired with an administered price of Rs 2,110 per MMBTU, backed by the government for a minimum ten-year horizon and structured through a cost-sharing mechanism intended to keep consumer prices stable.
Capital Assistance Reaches Rs 2 Crore Per Tonne of Daily Capacity
Greenfield CBG projects qualify for capital assistance of up to Rs 2 crore per tonne per day of installed capacity, extending to feedstock aggregation and organic manure processing assets rather than plant machinery alone; brownfield expansions of existing plants are also eligible. The scheme adds pipeline-infrastructure support connecting plants to trunk lines and city networks, a dedicated credit guarantee mechanism aimed at MSME-based projects, and a CBG Ecosystem Challenge Fund for district-level feedstock mapping and capacity building.
Ten-Fold Production Target Tests Whether Feedstock Logistics Can Scale
The scheme's price and offtake guarantees address the financing side of CBG economics, the piece developers have flagged as the binding constraint on new capacity. What they do not resolve on their own is feedstock logistics: aggregating dispersed agricultural residue and cattle dung at the volume a tenfold production increase requires is an operational problem distinct from securing capital or a buyer. Rural feedstock suppliers, MSME developers gaining better credit access, and city gas distributors gaining a domestic supply source stand to benefit if that logistics gap closes; if it does not, capital assistance alone will not move production much beyond where the prior generation of programmes left it.
What to Watch
Watch whether city gas distributors report compliance against the 3% FY2026-27 blending target once the Offtake Assurance framework takes effect, and whether early project sanctions skew toward brownfield expansions of the roughly 200 existing plants rather than genuinely new greenfield capacity, an early signal of whether GOBARdhan is scaling the base or formalizing what already existed.
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