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Galvanizing Organic Bio-Agro Resources Dhan – National Circular Bioenergy Scheme
On August 6, 2026, the Union Cabinet approved the Galvanizing Organic Bio-Agro Resources Dhan (“GOBARdhan”) – National Circular Bioenergy Scheme (“Scheme”) with an outlay of INR 23,731 crore (Indian Rupees twenty-three thousand seven hundred and thirty-one crore). The Scheme aims to strengthen the domestic energy production, given that India currently imports nearly half of its natural gas requirements and considering the recent geopolitical disruptions affecting global liquefied natural gas supply routes. GOBARdhan focuses on converting organic waste including cattle dung, crop residue, kitchen waste and market waste into Compressed Biogas (“CBG”) and bio-slurry. This Scheme consolidates all CBG-related initiatives under the Ministry of Petroleum and Natural Gas, replacing the framework involving multiple ministries with a single framework to improve coordination, implementation and sectoral growth.
As per the Press Information Bureau press release dated August 6, 2026, the Scheme will be implemented from Financial Year (“FY”) 2026–27 to FY 2035–36 and aims to make CBG a key pillar of India’s clean energy mix. It seeks to significantly increase domestic CBG production, mobilise private investment and promote a circular bioeconomy. The Scheme proposes measures such as assured demand, stable pricing, capital assistance, pipeline connectivity, credit guarantees and technology development.
Building on existing initiatives such as Sustainable Alternative Towards Affordable Transportation scheme, the Market Development Assistance scheme, the Biomass Aggregation Machinery scheme, the Development of Pipeline Infrastructure scheme and central financial assistance under the National Bioenergy Programme, GOBARdhan creates a unified platform across the entire CBG value chain. This integrated approach is expected to strengthen energy security, reduce dependence on imported fossil fuels, improve waste management, generate rural livelihoods and create additional income opportunities for farmers.
Key Components of the Scheme
Assured CBG offtake
The Scheme establishes a dedicated and reliable CBG offtake framework under which the City Gas Distribution (“CGD”) entities will procure CBG to meet phased obligations of 3% in FY 2026–27, 4% in FY 2027–28, and 5% from FY 2028–29 onwards. The objective is to create a predictable, long-term market for producers, improve project viability and encourage private investment.
Stable CBG pricing framework
A government-backed administered price of INR 2,110 (Indian Rupees two thousand one hundred and ten) per metric million British thermal unit has been introduced to provide stable and remunerative pricing for producers. The framework aims to offer long-term revenue certainty while balancing consumer affordability through a mix of government support and market-based cost sharing. This revision in CBG pricing is designed to ensure that CBG producers receive a stable and viable price that enables plants to operate sustainably. The Government-funded affordability support and a substantially wider gas pool protect consumers from any material price impact.
Capital assistance
Eligible greenfield CBG projects can receive capital support of up to INR 2,00,00,000 (Indian Rupees two crore) per tonne per day of installed CBG capacity, while brownfield expansion projects are also eligible for assistance. The support covers not only plant infrastructure but also key value-chain assets, including feedstock aggregation, organic manure processing, and value-addition facilities. This is expected to lower initial investment requirements, facilitate faster financial closure, and promote greater participation from private developers, Micro, Small, and Medium Enterprises (“MSMEs”), cooperatives, and rural entrepreneurs.
Development of pipeline infrastructure
The Scheme supports both cluster-based and standalone pipeline infrastructure connecting CBG plants with trunk pipelines and CGD networks. Improved pipeline connectivity is expected to diminish evacuation costs, enhance market access and drive greater utilisation of domestically produced CBG.
Credit guarantee support
A dedicated credit guarantee mechanism is expected to facilitate greater institutional lending to CBG projects led by MSMEs by mitigating part of the credit risk faced by financial institutions and providing credit guarantee coverage of up to 85% on eligible loans. This risk-sharing framework can improve the availability and affordability of finance, while also ease collateral constraints and enabling faster project implementation.
Further, by lowering financing barriers, the mechanism is expected to encourage greater participation from MSMEs, women-led enterprises, and first-time project developers, thereby fostering a more diverse, competitive, and entrepreneurial CBG ecosystem.
CBG ecosystem challenge fund
The Scheme establishes a dedicated CBG ecosystem challenge fund to strengthen district-level implementation and local CBG value chains. This fund will support feedstock mapping, aggregation infrastructure, district-level planning, technology adoption, organic manure value addition, capacity building and stakeholder awareness.
Expected outcomes
Over the next decade, the Scheme is expected to deliver nearly ten-fold growth in domestic CBG production, strengthen India’s energy security, improve waste management, enable faster project implementation and reduce import dependence. This is projected to result in foreign exchange savings of over INR 40,000 crore (Indian Rupees forty thousand crore). The Scheme is also expected to contribute more than INR 75,000 crore (Indian Rupees seventy-five thousand crore) to India’s GDP, generate over 1.5 (one point five) lakh jobs, replace 10 (ten) million metric tonnes of fossil fuel consumption, produce 250 (two hundred and fifty) million metric tonnes of organic fertiliser, and reduce carbon emissions by more than 40 (forty) million metric tonnes through improved utilisation of organic waste.
The Union Government has also launched the GOBARdhan unified registration portal, which serves as the single-window platform for registration and access to scheme benefits, to streamline implementation.
Conclusion
The Scheme is a laudable step towards developing a commercially viable CBG industry. The assured offtake of CBG and the introduction of blending obligations are significant from an industry perspective, as they provide greater demand and revenue visibility to CBG producers and reduce the uncertainty associated with securing a market for the gas produced. A predictable offtake mechanism, with a growing mandatory market for CBG through blending, could improve the bankability of CBG projects and encourage greater private investment in the sector. In the longer run, increased CBG production is also expected to reduce the dependence on fossil fuels, improve the utilisation of agricultural and organic waste and create additional revenue opportunities for stakeholders in the value chain. The Scheme therefore is expected to support the development of a sustainable and scalable CBG industry in India.
This Prism has been prepared by:
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M. Arun Kumar |
Kopal Kesarwani |
Ragha Sudhan S |
For more details, please contact km@jsalaw.com.
