The Indian government has approved a $2.7bn national programme to increase compressed biogas (CBG) production by nearly ten-fold over the next decade, aiming to strengthen domestic renewable gas supply and improve energy security.
The union cabinet approved the Galvanizing Organic Bio-Agro Resources Dhan (GOBARdhan) scheme, which will run from the current fiscal year through the fiscal year ending March 2036, according to a government notification issued on 6 August.
The scheme is designed to convert agricultural residue, cattle dung, municipal organic waste and other biomass into CBG, a renewable fuel chemically equivalent to natural gas that can be injected into existing gas distribution networks.
India's 217 operational CBG plants currently produce around 0.4mn m³/d, as per the notification. The government's target implies output rising to roughly 4mn m³/d by 2035-36, based on current production levels, Argus understands.
India imported around half of its natural gas requirements in 2025, with regasified LNG imports averaging about 94mn m³/d, equivalent to 24.91mn t, according to Kpler. Even if the government achieves its target of 4mn m³/d of CBG production, this would displace only around 4pc of current LNG imports, according to Argus calculations.
This suggests the scheme's significance lies less in materially reducing LNG imports and more in creating a domestic renewable gas stream for the city gas distribution sector while improving energy security.
Under the scheme, city gas distribution companies will be required to procure increasing volumes of CBG to meet mandatory blending targets of 3pc in the current fiscal year, 4pc in the fiscal year ending March 2028 and 5pc from the following year onwards for both compressed natural gas (CNG) and domestic piped natural gas (PNG).
The government has fixed an administered CBG price of 2,110 rupees/mn Btu ($22.16/mn Btu), equivalent to around $1.1/kg, alongside capital assistance of up to $210,000/t of installed capacity for eligible projects.
This is higher from the current Argus-assessed spot LNG price at $19.12/mn Btu on 6 August prices for deliveries to west India for the first-half of September, as well as the average price of $11.98/mn Btu for 2025.
Additional support includes funding for pipeline connectivity, credit guarantees covering up to 85pc of eligible loans for small enterprises, and a challenge fund aimed at strengthening local feedstock and supply chains.
"The GOBARdhan scheme is the first biogas policy in India that tackles all three bottlenecks that kept private capital out of the sector: assured offtake, stable pricing, and capital support in a single framework," said Dilip Patil, regional director-west for the Indian Federation of Green Energy.
The real impact of this will not be measured in kilograms of gas alone, but in paddy straw baled instead of burnt, dung that earns a dairy farmer a second income, fermented organic manure that rebuilds depleted soils, and a reduction in imported LNG that no longer needs to be paid for, Indian Biogas Association chairman Gaurav Kumar Kedia said.
