India turns to biogas as LNG import risks rise; Cabinet clears Rs 23,731 crore GOBARdhan scheme

As geopolitical tensions expose India’s dependence on imported natural gas, the Union Cabinet on Thursday approved a Rs 23,731 crore scheme to rapidly expand compressed biogas (CBG) production, betting on domestically produced fuel to strengthen the country’s energy security and reduce its reliance on liquefied natural gas (LNG).

The National Circular Bioenergy Scheme, or GOBARdhan (Galvanising Organic Bio-Agro Resources Dhan), will be implemented over a 10-year period from FY2027 to FY2036. The government aims to increase domestic compressed biogas production nearly tenfold by ensuring long-term demand, stable pricing, capital support, pipeline connectivity and easier access to finance.

The decision comes after recent disruptions around the Strait of Hormuz highlighted India’s vulnerability to global energy supply shocks. India currently imports around 50 per cent of its natural gas requirement, with nearly 55-60 per cent of its LNG imports passing through the strategic waterway.

“India currently imports around 50 per cent of its natural gas requirement, making domestically produced compressed biogas an important alternative, particularly amid geopolitical uncertainties,” Information and Broadcasting Minister Ashwini Vaishnaw said while briefing reporters after the Cabinet meeting.

The government estimates the scheme will help save more than Rs 40,000 crore in foreign exchange over the next decade by reducing LNG imports while creating a domestic biogas industry worth around Rs 75,000 crore.

Six pillars to boost compressed biogas

The GOBARdhan scheme is built around six key components designed to address the biggest challenges facing India’s compressed biogas industry.

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The first is assured demand. City Gas Distribution (CGD) companies will be required to procure compressed biogas to meet mandatory blending targets of 3 per cent in FY2027, 4 per cent in FY2028 and 5 per cent from FY2029 onwards. The blending requirement will apply to compressed natural gas used in transport as well as piped natural gas supplied to households.

To improve project viability, the government has also fixed an administered price of Rs 2,110 per million British thermal units (MMBTU), providing producers with a predictable pricing framework over the long term.

The scheme also includes capital support for new projects. Eligible greenfield compressed biogas plants will receive financial assistance of up to Rs 2 crore per tonne per day of installed capacity, while brownfield expansion projects will also qualify for support.

In addition, the government will provide financial assistance to develop pipeline infrastructure connecting compressed biogas plants with trunk pipelines and city gas distribution networks. A dedicated credit guarantee mechanism will improve access to finance for eligible micro, small and medium enterprises, while a Challenge Fund will support district-level feedstock aggregation, technology adoption and project development.

Turning waste into fuel

The scheme aims to convert agricultural residue, cattle dung, sugar industry waste such as press mud, municipal organic waste and other biomass into compressed biogas that can replace a portion of imported natural gas.

Besides producing cleaner fuel, the initiative is expected to improve agricultural waste management, generate organic manure and create additional income opportunities for farmers and rural entrepreneurs.

The government said the programme builds on existing initiatives such as the Sustainable Alternative Towards Affordable Transportation (SATAT) scheme, under which more than 200 compressed biogas plants have already been commissioned across the country.