After E20, Govt Bets Big On Bio-CNG Blending – Rs 23,731 Cr GOBARdhan Scheme Approved

After E20 ethanol blending in petrol, the government is now taking a similar approach for CNG by gradually blending domestically produced Compressed Biogas (CBG), commonly known as Bio-CNG, into the country’s natural gas supply.

The Union Cabinet has approved the GOBARdhan (Galvanizing Organic Bio-Agro Resources Dhan) National Circular Bioenergy Scheme with a total outlay of Rs 23,731 crore, marking the biggest policy push yet for India’s Bio-CNG sector. The scheme, which will be implemented from FY2026-27 to FY2035-36, aims to significantly increase domestic Bio-CNG production while strengthening India’s clean mobility and energy security goals.

Unlike previous initiatives that focused on individual aspects of the CBG ecosystem, GOBARdhan brings together assured demand, stable pricing, capital assistance, pipeline connectivity, easier financing and ecosystem development under a single national framework.

Big Push For Bio-CNG

Compressed Biogas (CBG) is produced from organic waste such as cattle dung, crop residue, municipal waste, food waste and sugar mill by-products. After purification, it is chemically almost identical to natural gas and can be supplied through the existing CNG and PNG network without requiring changes to vehicles or infrastructure.

The government expects the new scheme to increase domestic Bio-CNG production by nearly ten times over the coming decade, reducing dependence on imported natural gas while converting agricultural and municipal waste into a valuable energy resource.

Assured Demand And Fixed Pricing

One of the biggest announcements under the scheme is an assured offtake mechanism for Bio-CNG producers. City Gas Distribution (CGD) companies will procure CBG to meet the government’s notified blending targets of:

3% in FY2026-27
4% in FY2027-28
5% from FY2028-29 onwards

This effectively creates assured long-term demand for Bio-CNG producers, improving the commercial viability of new projects and encouraging fresh investments in the sector. The government has also introduced an administered CBG price of Rs 2,110 per MMBTU, providing producers with long-term revenue visibility. Stable pricing has been one of the key demands from the industry, as fluctuating prices often affected project viability.

To encourage new investments, eligible greenfield CBG projects will receive capital assistance of up to Rs 2 crore per tonne per day (TPD) of installed production capacity. Brownfield expansion projects will also qualify for support. The scheme further includes funding for pipeline connectivity, credit guarantee support for MSMEs and a dedicated challenge fund aimed at improving feedstock collection, technology adoption and district-level implementation.

What It Means For The Auto Industry

The announcement is particularly significant for India’s rapidly expanding CNG vehicle market. Over the past few years, manufacturers such as Maruti Suzuki, Tata Motors, Hyundai, Toyota and several commercial vehicle makers have aggressively expanded their CNG portfolios. Maruti alone now offers CNG across a majority of its passenger vehicle lineup, while Tata has steadily expanded its iCNG range, including turbocharged CNG powertrains. More OEMs have aggressive plans to launch new CNG powered vehicles in India.

As domestic Bio-CNG production increases, it can gradually supplement conventional natural gas supplied through CNG stations. Unlike ethanol-blended petrol, which requires engine compatibility depending on the blend level, Bio-CNG is chemically similar to natural gas. Existing CNG vehicles can therefore run on blended gas without requiring any hardware modifications, making adoption significantly easier.

Apart from supporting cleaner mobility, the policy also aims to reduce India’s dependence on imported natural gas while making productive use of agricultural residue, cattle dung and other organic waste.

Execution Will Be Key

While the policy provides the strongest support yet for India’s Bio-CNG sector, execution will determine its success. India has already commissioned more than 200 CBG plants under earlier initiatives such as SATAT (Sustainable Alternative Towards Affordable Transportation) and the National Bioenergy Programme.

However, industry growth has often been constrained by inconsistent demand, financing challenges, feedstock logistics and limited pipeline connectivity. The earlier SATAT initiative had envisaged thousands of Bio-CNG plants across the country, but the pace of implementation has been much slower than originally expected.

By integrating assured demand, stable pricing, capital assistance, pipeline support and easier access to finance under one umbrella, GOBARdhan attempts to address many of the structural bottlenecks that have slowed adoption over the years.

If successfully implemented, GOBARdhan has the potential to do for Bio-CNG what the E20 programme did for ethanol-blended petrol. By creating assured demand and improving project economics, the government hopes to significantly scale domestic renewable gas production while supporting India’s expanding CNG vehicle base. The success of the scheme, however, will ultimately depend on how quickly new plants are commissioned, connected to the country’s gas distribution network and supplied with adequate feedstock.