The Union Cabinet, chaired by Prime Minister Narendra Modi, on Thursday approved the GOBARdhan (Galvanizing Organic Bio-Agro Resources Dhan) National Circular Bioenergy Scheme with a total outlay of ₹23,731 crore. The scheme aims to transform India’s vast organic waste resources into clean energy, rural livelihoods and economic growth.
The scheme, to be implemented from FY 2026-27 to FY 2035-36, seeks to establish Compressed Biogas (CBG) as a major component of India’s future energy mix by creating an integrated framework that provides assured demand, stable pricing, capital assistance, pipeline connectivity, credit support and technology development.
The Ministry of Petroleum and Natural Gas said that the initiative is expected to increase domestic CBG production by nearly ten times, strengthen India’s energy security, attract large-scale private investment and accelerate the transition towards a circular bioeconomy.
The scheme aims to convert agricultural residue, cattle dung, press mud, municipal organic waste and other biomass resources into renewable fuel, organic manure and additional income for farmers while promoting sustainable waste management across the country.
The Ministry will implement the scheme, bringing together various elements of the compressed biogas value chain under a single national framework to improve project viability and provide greater certainty to investors, lenders and developers.
The Ministry said the initiative builds on the foundation laid through earlier programmes such as the Sustainable Alternative Towards Affordable Transportation (SATAT) initiative, the Market Development Assistance (MDA) scheme for organic manure, the Biomass Aggregation Machinery (BAM) scheme, the Development of Pipeline Infrastructure (DPI) scheme and financial assistance provided under the National Bioenergy Programme.
These initiatives have already led to the commissioning of more than 200 compressed biogas plants across the country.
A key feature of the new scheme is the creation of an assured market for compressed biogas through a dedicated offtake framework. City Gas Distribution (CGD) entities will procure CBG to meet the government’s blending obligations, which have been fixed at 3 per cent in FY 2026-27, 4 per cent in FY 2027-28 and 5 per cent from FY 2028-29 onwards for the transport and domestic gas segments.
To provide long-term revenue certainty for producers, the government has also introduced an administered CBG price of ₹2,110 per Metric Million British Thermal Unit (MMBTU) under a government-backed pricing framework with a minimum tenure of ten years.
The scheme also provides capital assistance of up to ₹2 crore per tonne per day (TPD) of installed compressed biogas capacity for eligible greenfield projects. The financial support will also extend to feedstock aggregation systems, organic manure processing facilities and value-addition infrastructure, while brownfield projects expanding production capacity will also be eligible.
To strengthen market connectivity, the government will support the development of both cluster-based and standalone pipeline infrastructure linking CBG plants with trunk pipelines and City Gas Distribution networks, reducing transportation costs and improving access to markets.
Another component of the scheme is a dedicated Credit Guarantee mechanism, aimed at improving access to institutional finance for MSME-based compressed biogas projects by reducing lending risks and collateral requirements. The measure is expected to encourage greater participation by small enterprises, cooperatives, women entrepreneurs and first-time developers.
The Cabinet has also approved the creation of a CBG Ecosystem Challenge Fund, which will support district-level planning, feedstock mapping, aggregation infrastructure, technology adoption, capacity building, process improvement and awareness initiatives to strengthen local bioenergy ecosystems.
The Ministry said the scheme is expected to generate significant economic and environmental benefits by creating new income opportunities for farmers, feedstock suppliers, cooperatives and rural entrepreneurs while promoting scientific management of agricultural residue, cattle dung and municipal organic waste.
Besides strengthening India’s clean energy sector, the initiative is expected to reduce greenhouse gas emissions by replacing fossil fuels with renewable gaseous fuel and expand the production and use of organic manure.
Describing GOBARdhan as a landmark initiative in India’s clean energy transition, the government said the scheme would transform the country’s organic waste into a strategic economic resource while advancing the goals of energy security, waste-to-wealth, rural prosperity, Atmanirbhar Bharat and the vision of Viksit Bharat.
