India’s CBG Industry in 2026: Year in Review

Editor's note: This review covers developments up to early October 2026. We will update it at year-end.

2026 marked a significant turning point for India’s compressed biogas (CBG) industry, as policy support began moving closer to the sector’s ambitions. Over the industry’s eight-year journey, registrations had grown much faster than the number of operational plants, highlighting the gap between project announcements and actual implementation. The Government strengthened its support for CBG through an expanded scheme focused on fixed pricing, assured offtake, and capital assistance, while regulatory authorities brought greater attention to the performance and operational status of existing plants.

This article covers developments in 2026 and their implications for developers.

GOBARdhan Scheme: ₹23,731 Crore and a New Framework

The biggest development of the year was approval by the Union Cabinet of the ₹23,731 crore GOBARdhan scheme for compressed biogas, effective from FY2026-27 to FY2035-36. It took immediate effect from 1 September 2026, the component-wise Operational Guidelines were notified on 15 September 2026, and the scheme was formally launched by Union Petroleum Minister Hardeep Singh Puri on 1 October 2026.

Previously fragmented CBG support across ministries was shifted to the Ministry of Petroleum and Natural Gas, incorporating earlier initiatives including SATAT. The main features are shown below.

The scheme also lays out rules for contracts. City gas distribution (CGD) entities have no take-or-pay obligation in the first year; after that the obligation can be raised to 90% of the annual nominated quantity. From the second year onwards, CBG producers have a supply-or-pay obligation of up to 50% of the annual contracted quantity. The objective is to ramp up domestic CBG production almost tenfold over the decade.

For a closer read on the guidelines, see our articles Understanding the GOBARdhan GR and the State-Wise CBG Subsidy Guide.

CBG Blending Mandate: From Promise to Obligation

The CBG Blending Obligation for city gas distribution became mandatory from FY2025-26 at 1% of CNG (transport) and domestic PNG volumes. PNGRB’s Connectivity and Performance Report for FY2025-26, as of August 2026, shows CBG sales of 111.48 MMSCM against CNG and domestic PNG sales of 12,033 MMSCM, which works out to around 0.9% blending – just short of the 1% target.

The obligation, shown in the table below, rises significantly.

PNGRB expects CBG demand of about 1.03, 1.54 and 2.07 MMSCMD in FY27, FY28 and FY29 respectively – a strong indicator of new capacity demand.

Reality Check: Registrations vs. Working Plants

The year also saw hard numbers on execution. The table below has the main figures.

The gap between that 2018 target and today’s figures is a reminder that feedstock aggregation, financing, offtake logistics and operational discipline, rather than technology, determine a plant’s success.

Pipeline Connectivity as a Bottleneck

PNGRB’s FY2025-26 report highlights a logistics issue. Of 207 functional plants, only 24 were connected to pipelines, with work underway at 15 and proposals started at 20. Across operational and under-construction plants, 405 had no planned pipeline connectivity. Among plants that provided offtake data, cascades carried about 65.7% of offtake and pipelines 8.9%.

GOBARdhan’s Pipeline Infrastructure component, which supports 50% of eligible connectivity cost, aims to address this. Developers should plan on pipeline planning becoming a standard part of DPRs.

States Step Up

Several states took steps on their own CBG policies in 2026.

• Maharashtra approved its State CBG Policy 2026 and earmarked ₹500 crore for CBG projects in the current financial year, including district coordination committees and a PPP hybrid annuity model.
• Chhattisgarh introduced a CBG Policy 2026.
• Andhra Pradesh sanctioned ₹60 crore to set up five CBG plants in urban local bodies (as reported in March 2026).

State policy is uneven, and land and approval procedures vary considerably from one state to another. Our State-Wise CBG Subsidy Guide has the details.

Organic Manure as a Focus

Fermented organic manure (FOM) is increasingly seen as a crucial component of plant economics. Market Development Assistance of ₹1,500 per tonne for FOM, liquid FOM and phosphate-rich organic manure continued in 2026, although reporting in March indicated that the scheme was due to terminate this year. Its future, and better marketing channels for FOM, will be vital to every developer.

Cooperatives and International Partnerships

In July 2026, at the 16th India-Japan Annual Summit, the two countries launched an initiative to support 1,000 cooperative-based biogas and organic fertiliser plants by 2030. To be implemented through dairy cooperatives, milk unions, village societies, FPOs and panchayats, it indicates rising interest in community-owned models alongside large commercial plants.

What 2026 Means for Developers

• Revenue visibility has improved. With a fixed administered price until 2036 and assured offtake, market risk is reduced and projects are more easily financed.
• Performance is rewarded. Half of the Sub-Component I Capital Assistance is linked to demonstrated plant load factor – plants must be designed and operated to run close to capacity.
• Feedstock remains the determining factor. Registration without commissioning shows that projects without secure feedstock struggle, regardless of policy.
• Offtake logistics require planning. Pipeline connectivity now has support, and cascade distances influence margins.
• Compliance is stricter. Online monitoring and automatic shut-off are mandatory.

Looking Ahead to 2027

The blending obligation triples to 3% in FY2026-27, meaning that CBG demand will outstrip supply. The next 12 to 18 months will show whether the new scheme can turn registrations into working plants. Things to watch include the first Capital Assistance disbursements, pipeline connectivity projects, more state policies and decisions on FOM support beyond 2026.

Building in 2027? Start With Bharat Bioenergy

Bharat Bioenergy supports CBG projects from project registration and bankable DPRs to PESO, CTE and CTO approvals, subsidy assistance, EPC execution with in-house equipment manufacturing, and long-term O&M. If the 2026 policy changes have put a CBG project on your agenda, get in touch with our team to plan your project.

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