Cabinet Clears ₹23,731 Crore GOBARdhan Scheme to Multiply India's Compressed Biogas Output Tenfold
The Union Cabinet has approved a ₹23,731 crore, ten-year GOBARdhan scheme to scale compressed biogas production nearly tenfold by FY36, offering farmers, MSMEs and cooperatives assured offtake, stable pricing and capital support.
The short answer
The Union Cabinet has sanctioned the GOBARdhan – National Circular Bioenergy Scheme with a total outlay of ₹23,731 crore, to be implemented from FY 2026-27 to FY 2035-36. The programme targets a near-tenfold increase in domestic compressed biogas (CBG) production by creating an integrated support ecosystem covering demand assurance, administered pricing, capital grants, pipeline access and credit guarantees. Agricultural residue, cattle dung and municipal organic waste will serve as primary feedstocks, generating new income streams for farmers while reducing India's dependence on imported fossil fuels.
The big picture
A ₹23,731 Crore Bet on India's Biogas Future
The Union Cabinet, chaired by Prime Minister Narendra Modi, has given the green light to the GOBARdhan (Galvanizing Organic Bio-Agro Resources Dhan) – National Circular Bioenergy Scheme, committing ₹23,731 crore over the decade spanning FY 2026-27 to FY 2035-36. Administered by the Ministry of Petroleum and Natural Gas, the programme is designed to lift domestic compressed biogas (CBG) production to nearly ten times its current level.
India already has a nascent CBG industry. Earlier initiatives — including the SATAT programme, Market Development Assistance for organic manure, the Biomass Aggregation Machinery scheme and National Bioenergy Programme financing — have collectively resulted in the commissioning of more than 200 CBG plants nationwide. GOBARdhan is intended to take the sector from this pilot-scale base to a nationally integrated clean energy industry, plugging persistent gaps around demand certainty, pricing risk, financing access and evacuation infrastructure.
Scheme architecture
Six Pillars That Span the Entire CBG Value Chain
Unlike piecemeal past interventions, GOBARdhan consolidates all major support instruments into a single framework built on six components:
- Assured offtake: City Gas Distribution (CGD) entities must procure CBG to meet a notified blending obligation — 3% in FY27, 4% in FY28, and 5% from FY29 in transport CNG and domestic PNG segments.
- Stable pricing: An administered price of ₹2,110 per MMBTU with a minimum ten-year horizon provides revenue certainty for producers.
- Capital assistance: Greenfield projects can access up to ₹2 crore per tonne per day (TPD) of installed CBG capacity; brownfield expansions also qualify, covering feedstock aggregation and organic manure infrastructure.
- Pipeline connectivity: Support for trunk pipeline and CGD network linkages to reduce transportation costs and widen market reach.
- Credit guarantee: A dedicated mechanism reduces collateral requirements for MSME-based projects, targeting first-time entrepreneurs, women entrepreneurs and cooperatives.
- CBG Ecosystem Challenge Fund: District-level support covering feedstock mapping, technology adoption, capacity building and organic manure value addition.
The farm connect
New Revenue Streams for Farmers From Waste to Wealth
At its core, GOBARdhan is as much an agricultural income programme as an energy scheme. Crop residue and cattle dung — biomass that farmers often burn or leave underutilised — become primary feedstocks for CBG plants, giving rural households a direct stake in the clean energy transition.
Each plant is expected to generate livelihoods across the feedstock collection, transportation, plant operations and organic manure production stages. The scheme also prioritises the production of fermented organic manure (FOM) and liquid fermented organic manure (LFOM), which can substitute chemical fertilisers over time — a meaningful cost-saving prospect for cultivators.
For cooperatives and rural MSMEs, the credit guarantee mechanism is particularly significant: by reducing lending risk and collateral thresholds, it lowers the entry barrier for first-time promoters who lack balance-sheet depth but have access to local biomass supply.
Energy security
CBG as a Domestic Substitute for Imported LNG
India's natural gas demand is expanding rapidly across transport, households, industry and commercial use. Because CBG is chemically equivalent to natural gas, it can be injected directly into existing pipeline and distribution networks — requiring no costly infrastructure overhaul.
The government's argument is straightforward: higher domestic CBG output displaces imported liquefied natural gas, strengthening energy security and reducing the foreign exchange burden. The productive use of agricultural residue and municipal organic waste carries an additional climate dividend — lower greenhouse gas emissions, a reduction in stubble burning and a cleaner approach to urban waste disposal.
Digital governance tools, simplified institutional arrangements and improved inter-agency coordination are expected to accelerate project approvals and reduce implementation timelines across the scheme's ten-year run.
Why it matters
For Indian farmers and agri-businesses, GOBARdhan opens a direct monetisation channel for crop residue and cattle dung that is currently burnt or wasted — converting an environmental liability into a revenue source. The mandatory CBG blending obligation, rising from 3% in FY27 to 5% from FY29, locks in long-term demand that should give lenders and private investors the confidence to finance rural biogas projects at scale. Policymakers and commodity traders should watch whether the administered price of ₹2,110 per MMBTU holds its attraction for producers as gas market dynamics evolve over the scheme's ten-year horizon.
Frequently asked
- What is the total outlay and duration of the GOBARdhan scheme?
- The GOBARdhan – National Circular Bioenergy Scheme has a total outlay of ₹23,731 crore and will be implemented over ten years, from FY 2026-27 to FY 2035-36.
- What is the mandatory CBG blending obligation under the scheme?
- City Gas Distribution entities will be required to blend CBG at 3% in FY27, 4% in FY28, and 5% from FY29 onwards in the transport CNG and domestic PNG segments.
- How much capital assistance can a new CBG plant receive?
- Eligible greenfield CBG projects can receive capital assistance of up to ₹2 crore per tonne per day (TPD) of installed capacity. Brownfield expansion projects also qualify under the scheme.
- How does GOBARdhan benefit farmers specifically?
- Farmers can monetise agricultural residue and cattle dung as feedstock for CBG plants, which also generate fermented organic manure that can reduce dependence on chemical fertilisers. The scheme is designed to create employment and income at the local level across feedstock collection, transportation and manure processing.
Source
This report summarises and analyses coverage from Rural Voice — Latest. The analysis and India context are IndianAgri's own.