GOBARdhan 2026: ₹2 Crore Per TPD Subsidy, Assured Price & 85% Credit Guarantee for CBG

On 6 August 2026, the Union Cabinet chaired by Prime Minister Narendra Modi approved GOBARdhan — the National Circular Bioenergy Scheme — with a total outlay of ₹23,731 crore, to run for ten financial years from FY 2026-27 to FY 2035-36. The stated ambition is to increase India's domestic Compressed Biogas production by nearly ten times over the decade.

But the headline number is not the real story. The real story is a structural shift in how India supports CBG — moving from a scattered collection of separate schemes into a single unified framework that directly attacks the financial risks that have held the sector back. If you are building, financing, or supplying a CBG plant, this is the most consequential policy change the sector has seen.

Here is exactly what changed, and why it matters.

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First, What Is CBG?

Compressed Biogas (CBG) is produced by taking organic material — paddy straw, cattle dung, press mud, agricultural residue, food and market waste, or municipal organic waste — and running it through anaerobic digestion to produce raw biogas. That biogas is then purified, removing CO₂, hydrogen sulphide, moisture, and other impurities, leaving a methane-rich gas that can be compressed and used much like CNG.

The chain is simple: waste becomes biogas, biogas is purified into CBG, and CBG enters the CNG, PNG, or gas distribution network. The government sees this single process as simultaneously addressing waste management, agricultural residue and stubble burning, energy security, and rural income — which is why it now sits at the centre of India's bioenergy strategy.

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The Old System: Good Intentions, Fragmented Delivery

GOBARdhan is not starting from zero. India had already been promoting CBG through several separate initiatives, each addressing one piece of the puzzle.

SATAT (Sustainable Alternative Towards Affordable Transportation) encouraged entrepreneurs to build CBG plants with oil and gas companies purchasing the output — an attempt to create a market for CBG. The CBG Blending Obligation, announced in 2023, introduced phased mandatory blending of CBG into CNG and domestic PNG to create demand. The Biomass Aggregation Machinery (BAM) scheme helped producers obtain the equipment needed to collect feedstock. The Development of Pipeline Infrastructure (DPI) scheme, with an outlay of around ₹994.5 crore for FY 2024-25 to FY 2028-29, addressed the problem of connecting plants to gas networks. Market Development Assistance (MDA) provided ₹1,500 per metric tonne for organic manure produced by these plants. And the National Bioenergy Programme offered additional financial support.

Each scheme was useful. The problem was the fragmentation.

Imagine building a ₹100 crore CBG plant under the old system. You would deal with one ministry for biomass, another for fertiliser and manure, another for energy, MoPNG for gas offtake, a separate pipeline agency for connectivity, and banks for financing. The CBG ecosystem was effectively spread across four different ministries and multiple programmes. The government's own explanation acknowledges that this fragmentation made coordination and implementation genuinely difficult.

GOBARdhan's single most important change is structural: it brings the major components together under one nodal ministry — the Ministry of Petroleum and Natural Gas — as one umbrella with multiple support mechanisms underneath.

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The First Big Change: Assured Demand

For any CBG developer, the biggest question has always been: who will buy my gas? A plant can be technically excellent but financially disastrous if it cannot sell its output at a viable price.

GOBARdhan establishes a dedicated CBG Offtake Assurance Framework. Procurement by City Gas Distribution entities will support the notified CBG obligation trajectory of 3% in FY 2026-27, 4% in FY 2027-28, and 5% from FY 2028-29 onwards, applied across the CNG transport and domestic PNG segments.

This converts a blending target into a clear, long-term demand signal. Instead of a developer hoping to find a buyer, there is now a policy-backed framework requiring gas distribution companies to procure CBG. For banks and investors evaluating a project, predictable demand is the difference between a speculative bet and a bankable business.

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The Second Big Change: Price Certainty

This is arguably the most commercially significant element of the entire scheme.

GOBARdhan introduces a government-backed administered CBG price of ₹2,110 per MMBTU — equivalent to approximately ₹105 per kg of CBG according to the government's announcement — backed by a minimum 10-year pricing framework.

To understand why this matters, consider the risk stack a developer faced under the old model: plant cost, feedstock cost, financing cost, an uncertain CBG selling price, and offtake risk all stacked on top of each other. The selling price — the entire revenue side of the project — was exposed to market uncertainty.

The old model was essentially: "I'll build a plant and hopefully find a buyer at a commercially viable price." The new model is: "There is a policy-backed demand framework and a defined price framework extending over at least a decade." That shift dramatically improves how bankable a project looks to a lender.

One important clarification: the ₹105/kg figure is the CBG pricing framework for producers — it is not the retail CNG price consumers will pay. The two are different things, and consumer prices depend on many additional factors.

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The Third Change: Stronger Capital Support

Under GOBARdhan, eligible greenfield CBG projects can receive capital assistance of up to ₹2 crore per TPD (tonne per day) of installed CBG capacity.

As a purely illustrative example, a 100 TPD project would have a maximum headline capital-assistance entitlement of ₹200 crore. But that figure should not be read as an automatic cheque — actual eligibility, conditions, eligible expenditure categories, and implementation rules all determine what a specific project receives.

Importantly, the support extends beyond the plant itself. It can cover parts of the value chain including feedstock aggregation, organic manure processing, and value addition. Brownfield expansion projects — existing plants adding capacity — are also eligible, not just new greenfield builds.

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The Fourth Change: Credit Guarantee

This element is especially significant for smaller companies and MSMEs.

GOBARdhan creates a dedicated credit guarantee mechanism for eligible MSME CBG projects, providing up to 85% credit guarantee coverage on eligible loans.

CBG projects are capital intensive, and a bank evaluating a new-technology business model will typically ask what collateral the developer can offer. The credit guarantee reduces the lender's risk directly. The logic is straightforward: a government guarantee lowers lender risk, which makes financing easier to obtain, which enables more projects to actually get built. For MSME developers who lack large balance sheets, this can be the difference between a project that gets funded and one that does not.

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The Fifth Change: Integrated Pipeline Connectivity

A CBG plant may produce excellent gas, but if it cannot be connected efficiently to a gas network, evacuation and transportation become expensive enough to undermine the project's economics.

GOBARdhan supports pipeline infrastructure connecting CBG plants to trunk pipelines and City Gas Distribution networks. CBG is far more valuable when it can enter the existing gas ecosystem directly rather than being transported long distances by other means. Integrating this connectivity support into the unified framework — rather than leaving it as a separate scheme — addresses one of the sector's most persistent operational bottlenecks.

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The Six Growth Engines of GOBARdhan

The government has structured GOBARdhan around six pillars, each targeting a specific risk in the CBG business:

First, assured CBG offtake creates predictable demand. Second, stable CBG pricing at ₹2,110/MMBTU provides revenue certainty. Third, capital assistance of up to ₹2 crore per TPD reduces the capex burden. Fourth, pipeline infrastructure support connects plants to gas networks. Fifth, the credit guarantee helps projects secure financing. Sixth, a CBG Ecosystem Challenge Fund supports feedstock mapping, biomass aggregation, district-level planning, technology and process improvement, organic manure, and training and capacity building.

Taken together, these six engines address nearly every major risk a CBG developer faces — from feedstock supply through to final gas sale.

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Old Policy vs New Framework: Side by Side

The through-line is clear: the old system was about building the ecosystem; the new one is about making that ecosystem bankable and scaling it nationally.

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An Important Nuance: This Is Not a Brand-New Policy

You may see headlines calling GOBARdhan "India's new CBG policy." Technically, that framing is incomplete.

GOBARdhan builds on policies that already existed — SATAT, BAM, DPI, MDA, and other programmes. The government itself describes these as the foundation on which GOBARdhan is now constructed. The accurate way to understand it is: the earlier collection of schemes has been consolidated into a single framework, with larger funding, price certainty, offtake assurance, financing support, and integrated infrastructure added on top.

It is integration and scaling, not invention. That distinction matters for anyone assessing how quickly the framework can deliver — because much of the underlying machinery is already in place.

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Why Now? The Energy Security Angle

There is a clear strategic driver behind the timing. According to the government's backgrounder, India currently meets roughly 50% of its natural gas requirement through imports, and recent geopolitical disruptions have highlighted the vulnerability of relying heavily on imported gas and LNG.

CBG is therefore no longer being viewed merely as a waste-management project. It is increasingly positioned as domestic renewable gas that can substitute part of India's imported fossil gas — which fundamentally raises its strategic importance. The government estimates that reduced energy-import dependence under the scheme could save more than ₹40,000 crore in foreign exchange over the decade, though this is a government projection rather than a guaranteed outcome.

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What This Means for Farmers

GOBARdhan could create a genuine new market for agricultural residue. Instead of paddy straw being burned in fields — the current default that drives North India's seasonal air pollution crisis — the chain becomes: farmer to aggregator to CBG plant, producing both biogas and organic manure.

The farmer or aggregator can potentially earn from biomass that previously had little or even negative value. For states with large quantities of crop residue, this is a meaningful shift in the economics of agricultural waste.

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What This Means for CBG Companies

This is where the policy becomes genuinely significant. A CBG developer now potentially receives support against almost every major risk in the business.

Feedstock risk is addressed through government support for aggregation and mapping. Construction and capex risk is reduced by capital assistance. Sales and offtake risk is covered by the CBG obligation and offtake assurance. Price risk is managed by the administered price framework. Transportation risk is eased by pipeline support. Financing risk is reduced by the credit guarantee. And technology and ecosystem risk is supported by the Challenge Fund.

The government is effectively trying to transform CBG from an interesting renewable-energy project carrying several commercial risks into a policy-supported infrastructure business with more predictable economics.

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What This Means for Energy Security

The strategic logic is a chain: agricultural waste, municipal waste, and cattle dung are converted into domestic CBG, which substitutes some fossil natural gas, which lowers the gas-import requirement, which improves energy security. Over the decade, the government projects the scheme could deliver nearly ten-fold growth in CBG production, more than ₹40,000 crore in forex savings, displacement of around 10 MMT of fossil fuel, more than ₹75,000 crore contribution to GDP, over 1.5 lakh jobs, more than 40 MT of CO₂ emissions avoided, and around 250 MMT of organic fertiliser production. These are expected outcomes and targets, not guarantees.

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Where the Sector Stands Today

As of 6 August 2026, the GOBARdhan portal showed 1,908 registered CBG and Bio-CNG plants, 217 commissioned, a commissioned capacity of about 0.4 MMSCMD, and 339 plants under construction.

This tells you something important: the government is not trying to create an industry from scratch. There is already a substantial project pipeline. The new framework is largely about making those existing and planned projects financially and operationally viable, and accelerating fresh investment on top of that base.

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The Bottom Line

If the entire policy change had to be captured in one sentence: the old CBG policy was mainly about creating the ecosystem; the new GOBARdhan framework is about making that ecosystem bankable and scaling it nationally.

For developers, investors, feedstock aggregators, and biomass suppliers, that shift in emphasis — from building an industry to de-risking it — is what makes GOBARdhan the most important development in India's CBG sector to date.

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Planning a CBG Project Under GOBARdhan?

If you are evaluating a CBG plant under the GOBARdhan framework — including capital assistance eligibility, offtake structuring, credit guarantee access, feedstock assessment, or financial modelling — Peltra Energy offers project-specific consultation.

Visit pelletrates.com/consultation to discuss your project. Consultation services cover scheme eligibility, feedstock mapping, site selection, and financial structuring — starting at ₹10,000.

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