In line with our commitment to keeping you informed about key developments, we aim to provide a concise overview of the upcoming opportunities in the compressed biogas (CBG) ecosystem in India.

Market Overview

India’s renewable energy sector has undergone remarkable expansion, with the country now ranking third globally in renewable energy installed capacity. In particular, CBG is emerging as a promising clean energy source, converting agricultural waste, animal manure, and municipal waste into renewable fuel. Supported by advancing technology, favourable policies, and growing infrastructure, India’s CBG market is well positioned for growth, contributing to energy security, waste management, and the country’s climate goals.

GOBARdhan: National Unified Scheme for Compressed Biogas

The GOBARdhan Scheme, with a total outlay of Rs. 237,310,000,000 (~USD 2.50 billion), will be implemented between Financial Year (FY) 2026–27 and FY 2035–36. It brings together key CBG initiatives, including the Sustainable Alternative Towards Affordable Transportation (SATAT) Initiative, Market Development Assistance and Pipeline Infrastructure Development, under a unified national platform. The component-wise operational guidelines under the GOBARdhan Scheme (Operational Guidelines) were notified by the Ministry of Petroleum and Natural Gas on September 15, 2026. By supporting the entire CBG value chain, the scheme aims to accelerate domestic production and drive nearly ten-fold growth in India’s CBG output.

Six growth components under the GOBARdhan Scheme are:

1. Assured CBG Offtake: Establishes a dedicated CBG offtake assurance framework under which eligible producers may access assured procurement of up to 100% of their saleable CBG (subject to technical and operational feasibility). CBG procurement by City Gas Distribution (CGD) entities is linked to the Compressed Biogas Obligation (CBO) trajectory, creating a predictable demand base through firm contractual arrangements and strengthening project bankability and long-term investment certainty.

2. Stable CBG Pricing Framework: Provides an administered CBG price of Rs. 2,110 (~USD 22) per metric million British thermal unit (MMBTU) under a government-backed pricing mechanism. The administered price is proposed to remain applicable until March 31, 2036, subject to periodic review, and includes support for by-product monetization, thereby enhancing project viability and investment certainty.

3. Capital Assistance: As per the Operational Guidelines, eligible greenfield CBG projects will receive capacity-linked capital assistance of up to Rs. 12,500,000 (~USD 0.13 million) per tonnes per day (TPD) of capacity for project establishment. Additional incentives are available for brownfield expansions, projects in specified Special Category Areas, and biogas-to-CBG upgrades, helping reduce upfront capital costs and encourage participation by private developers, micro, small and medium enterprises (MSMEs), cooperatives, and rural entrepreneurs.

4. Development of Pipeline Infrastructure: Provides financial assistance covering up to 50% of eligible project costs for pipeline connectivity between CBG plants, CGD networks, and trunk pipelines, supporting both plant-to-network and cluster-based infrastructure. This is intended to improve market access, reduce transportation costs, and facilitate greater utilization of domestically produced CBG.

5. Credit Guarantee Support: Introduces a dedicated credit guarantee scheme for CBG with an outlay of Rs. 6,250,000,000 (~USD 65.79 million) for eligible MSME-based CBG projects, providing guarantee cover of up to 85% of the loan amount, subject to prescribed caps, thereby improving access to institutional finance, reducing collateral requirements, and supporting long-tenure project financing, especially for women-led MSME borrowers.

6. CBG Ecosystem Challenge Fund: Establishes a dedicated fund to support feedstock mapping, aggregation infrastructure, district-level planning, technology adoption, organic manure value addition, capacity building, and stakeholder awareness initiatives.

Investment Opportunities in India 

1. Long-term infrastructure opportunity: By enabling direct CBG injection into natural gas and CGD networks, the GOBARdhan Scheme creates an opportunity for foreign investors to develop cluster-based and standalone pipeline infrastructure connecting CBG plants to existing gas networks. Government support covering up to 50% of project cost can reduce upfront capital requirements and make the Internal Rate of Return (IRR) much more attractive. The model offers potential for long-term, infrastructure-style cash flows while benefiting from the expansion of India’s CBG ecosystem and gas-grid integration.

2. Platform for foreign strategic investment: Indian CBG developers with operational assets, reliable feedstock access, technology capabilities, or regulatory expertise can attract Japanese and global energy majors through equity joint ventures (JVs) and technology partnerships. Several major Japanese conglomerates have already entered India's CBG market through strategic minority investments and JV structures, including, Sojitz (through IOC GPS Renewables) and Sumitomo Corporation (through its JV with TruAlt Bioenergy Limited). The growing participation of international investors in India’s biomethane sector demonstrates a potential platform-entry model, allowing foreign investors to combine capital and technology with Indian market access, local execution capabilities, and established CBG assets.

3. Strong investment window for CBG: The GOBARdhan Scheme combines capital assistance of up to Rs. 12,500,000 (~USD 0.13 million) per TPD of installed capacity, assured offtake, administered pricing, credit guarantee support, and expanding pipeline connectivity, enhancing project bankability and reducing market risk. With rising CBG blending obligations, investors can pursue opportunities across greenfield projects, brownfield expansions, and acquisition of operational CBG assets.

This update has been contributed by Saurav Kumar (Senior Partner), Aryan Rawat and Rudhi Nawal (Associates). 

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