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India's Biogas Boom: How Rs 5,000 Crore Investment Fuels Green Growth

India's biogas sector is heating up with a massive investment wave on the horizon. The industry expects to pull in over Rs 5,000 crore during the 2026-27 financial year thanks to growing demand and supportive policies. A recent GST reduction is particularly exciting, as it's predicted to significantly improve project economics and spur more development. This green fuel push is key to cutting emissions, managing waste, and boosting rural employment across the country.

Key Points: India Biogas Sector to Attract Over Rs 5000 Crore Investment in 2026-27

  • Over 31,400 tonnes of compressed biogas sold by 94 plants in FY 2024-25
  • New GST reduction expected to boost project viability by 45%
  • Government provides 15-20% capital cost assistance for new projects
  • Millions of small-scale digesters offer scope for efficiency improvements
2 min read

India's biogas sector likely to attract Rs 5,000 crore investment in 2026-27

India's biogas sector is set for massive growth, with over Rs 5,000 crore investment expected in 2026-27, driven by policy support and strong market demand for clean fuel.

"The relaxed GST regime is going to augur ease of doing business in the CBG ecosystem. - Gaurav Kedia, IBA Chairman"

New Delhi, Dec 21

India's biogas sector is expected to attract an investment exceeding Rs 5,000 crore during the financial year 2026-27 on the back of rising market demand for gas, according to the Indian Biogas Association (IBA).

According to government data, 94 compressed biogas (CBG) plants sold more than 31,400 tonnes of CBG during FY 2024-25, which reflects the growth in the sector and strong market uptake, the IBA said in a statement.

The IBA expects significant commissioning of new CBG facilities, effective and organised supply chains for feedstock, and unified and integrated policy frameworks to support the rapid adoption of biogas.

There is also ample scope for efficiency improvement and capacity utilisation in the several million small-scale traditional biogas digesters, and the country programmes are scaling up support for the various medium-sized plants which offer the benefits of cleaner cooking fuel, rural employment and organic manure, the statement added.

"The relaxed GST regime is going to augur ease of doing business in the CBG ecosystem. We anticipate that a reduction of 7 per cent in the applicable GST rate for the CBG sector shall significantly improve project viability, and the direct impact would translate into a 45 per cent increase in new investments in the industry over the short to medium term," IBA Chairman Gaurav Kedia said.

"Indirectly across the industry value chain, the multiplier effect would be much larger," he added.

CBG, a renewable, green fuel made by purifying and compressing biogas from organic waste (like farm waste, dung, sewage) to be identical to Compressed Natural Gas (CNG). It's a key part of India's strategy to reduce oil imports, manage waste responsibly, cut emissions, and boost rural economies, with government schemes like SATAT promoting its production and use as a clean alternative fuel for vehicles, industries, and cooking.

The Ministry of New and Renewable Energy (MNRE) currently provides central financial assistance covering 15-20 per cent of a project's capital cost. Additionally, marketing development assistance of Rs 1.50 per kilogram is offered to promote the offtake of organic fertilisers, a key byproduct of biogas plants. There are also incentives for pipeline laying to connect plants to the gas grid.

- IANS

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Reader Comments

P
Priya S
Hope this investment reaches the grassroots. My village in Punjab has so much farm waste that just gets burned, causing pollution. If we can set up a medium-sized plant here, it would provide clean fuel for cooking and create local jobs. The key will be the "organised supply chains for feedstock" they mentioned.
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Michael C
As an investor watching this space, the numbers are promising. 31,400 tonnes of CBG sold is a solid start. The 15-20% capital cost assistance from MNRE and the marketing aid for fertiliser are crucial incentives. The 45% projected investment increase post-GST cut shows strong confidence. A sector to watch closely.
S
Siddharth J
Good step, but execution is everything. We've seen big announcements before. The "unified policy framework" is critical—right now there's too much red tape and different rules in different states. Also, who will ensure the millions of small traditional digesters actually get upgraded? Hope this isn't just another headline.
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Nisha Z
The organic manure byproduct is a game-changer for farmers! Chemical fertilisers are getting so expensive. If this can reduce our dependency on them and improve soil health, it's a win-win. Rs 1.50/kg assistance is a good start to promote it. More awareness needed in rural areas.
R
Rohit P
Every bit that reduces our massive oil import bill is welcome. CBG in vehicles can make a real dent. But we need more CNG stations first to create demand. The incentive for pipeline laying is smart. Hope this creates a circular economy in true sense. Jai Hind!

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