In a major push towards energy security and cleaner fuel, the Union Cabinet has approved the ₹23,731 crore National Circular Bioenergy Scheme (GOBARdhan), a 10-year programme aimed at significantly increasing domestic compressed biogas (CBG) production and reducing India's dependence on imported liquefied natural gas (LNG).

The scheme, which will run from FY2027 to FY2036, seeks to transform agricultural residue, cattle dung, municipal organic waste and other biomass into compressed biogas, while strengthening the country's renewable energy ecosystem and promoting a circular economy.

The approval comes amid growing concerns over global energy supply disruptions, particularly following geopolitical tensions affecting the Strait of Hormuz, through which a large share of India's LNG imports passes. India currently imports nearly 50 per cent of its natural gas requirement, making energy diversification a strategic priority.

Reducing Import Dependence

Announcing the Cabinet decision, Union Information and Broadcasting Minister Ashwini Vaishnaw said domestically produced compressed biogas would play a crucial role in reducing reliance on imported natural gas and improving India's long-term energy resilience.

According to government estimates, the scheme could help save more than ₹40,000 crore in foreign exchange over the next decade by replacing imported LNG with domestically produced biofuel. It is also expected to create a bioenergy industry valued at nearly ₹75,000 crore.

Six-Pillar Strategy

The GOBARdhan scheme has been designed around six key components to accelerate the growth of India's compressed biogas sector.

A major feature is the introduction of mandatory blending targets for City Gas Distribution (CGD) companies. Under the roadmap, compressed biogas blending will be fixed at 3 per cent in FY2027, 4 per cent in FY2028, and 5 per cent from FY2029 onwards for both transport fuel and piped natural gas supplied to households.

To improve investor confidence, the government has also introduced an administered price of ₹2,110 per million British thermal units (MMBTU), providing producers with predictable long-term pricing.

Financial Support for Projects

The scheme provides substantial financial assistance for establishing new compressed biogas plants. Eligible greenfield projects will receive capital support of up to ₹2 crore per tonne per day of installed capacity, while existing plants expanding operations will also qualify for assistance.

In addition, financial support will be provided for developing pipeline connectivity between compressed biogas plants and existing gas distribution networks, helping producers integrate with the national gas infrastructure.

A dedicated credit guarantee mechanism will improve financing access for micro, small and medium enterprises (MSMEs), while a Challenge Fund will support district-level feedstock aggregation, technology adoption and project development.

Waste-to-Wealth Initiative

The programme aims to utilise agricultural residue, cattle dung, sugar industry waste such as press mud, municipal organic waste and other biodegradable materials for biogas production.

Apart from generating clean fuel, the initiative is expected to improve waste management, reduce stubble burning, increase production of organic manure and create additional income opportunities for farmers, rural entrepreneurs and local communities.

The government believes the initiative will also contribute to lowering greenhouse gas emissions by converting organic waste into renewable energy instead of allowing it to decompose or be burnt in open fields.

Building on Existing Progress

The new scheme builds upon the government's Sustainable Alternative Towards Affordable Transportation (SATAT)initiative, under which more than 200 compressed biogas plants have already been commissioned across India.

Officials expect the new policy framework to accelerate investment in the bioenergy sector by ensuring stable demand, better financing options and long-term commercial viability for compressed biogas producers.

With growing global uncertainty over energy supplies and increasing emphasis on clean energy transition, the Cabinet's approval of the GOBARdhan scheme marks another significant step in India's efforts to strengthen energy security while promoting sustainable waste management and rural economic development.