New Delhi: In a bid to strengthen the biogas sector and empower farmers, the Union Cabinet, chaired by Prime Minister Narendra Modi, on Thursday approved ‘GOBARdhan’ -- the National Circular Bioenergy Scheme -- with a total outlay of Rs 23,731 crore. 

The scheme will be implemented from FY27 to FY36 and will establish compressed biogas as a major pillar of India’s future energy mix. It aims to increase domestic Compressed Biogas (CBG) production nearly 10-fold, mobilise large-scale private investment and create a vibrant circular bioeconomy across the country.

According to the Cabinet, ‘GOBARdhan’ establishes a dedicated ‘CBG Offtake Assurance’ framework to provide a reliable and predictable market for producers.

Procurement by City Gas Distribution entities will support achievement of the notified CBG Obligation trajectory of 3 per cent in FY27, 4 per cent in FY28, and 5 per cent from FY29 onwards in the CNG (Transport) and PNG (Domestic) segments.

The framework converts the blending obligation into a clear, long-term demand signal for the industry. Consistent implementation across CGD networks will improve project bankability, support capacity utilisation and encourage long-term private investment, according to an official statement.

Moreover, the scheme introduces a stable administered CBG price of Rs 2,110 per Metric Million British Thermal Unit (MMBTU), supported through a government-backed pricing framework to provide long-term revenue visibility while protecting consumer affordability.

“With a minimum 10-year horizon, the pricing framework will provide producers with durable revenue certainty, commercially attractive returns and a stronger business case for investment and capacity expansion,” the statement noted.

Notably, eligible greenfield CBG projects will receive capital assistance of up to Rs 2 crore per ton per day (TPD) of installed CBG capacity. The support extends beyond core plant machinery to critical value-chain assets for feedstock aggregation, organic manure processing, and value addition. Brownfield projects expanding their production capacity will also be eligible.

The scheme also supports both cluster-based and standalone pipeline infrastructure connecting CBG plants with trunk pipelines and City Gas Distribution networks. Greater pipeline connectivity will reduce evacuation costs, improve reliability, expand market reach, and enable higher utilisation of domestically produced CBG.

A dedicated Credit Guarantee mechanism will strengthen lender confidence and expand the flow of institutional credit to eligible MSME-based CBG projects. By sharing a portion of lending risk, the mechanism will improve access to affordable finance, reduce collateral requirements, and support faster project development.

‘GOBARdhan’ also establishes a dedicated CBG Ecosystem Challenge Fund to accelerate district-level implementation and strengthen local value chains across the CBG ecosystem.

Administered by the Ministry of Petroleum and Natural Gas, the scheme creates one integrated platform across the entire CBG value chain.