Budget 2026: Biogas Industry Seeks Major Financial Push

The Indian Biogas Association (IBA) has formally requested the government to establish a ₹10,000 crore fund dedicated to providing capital subsidies for the biogas sector in the upcoming Union Budget 2026. This proposal aims to accelerate the growth of compressed biogas (CBG) production and integrate it more deeply into India's green energy strategy.

Increased Production Subsidies

IBA specifically recommended a 50% increase in the existing subsidy, proposing ₹6 crore per 4.8 tonnes per day (TPD) of CBG production capacity. Furthermore, the association suggested capping the upper limit for a single project at ₹25 crore to accommodate larger ventures, a significant hike from the current ₹10 crore cap. These measures are intended to offset rising capital expenditure, which has surged by over 50% since the subsidy scheme's inception in 2014.

Organic Fertilizer Integration

Beyond production incentives, IBA advocates for a mandated 5% blending of fermented organic manure (FOM) in overall fertilizer application by 2028, escalating to 10% by 2030. This initiative aims to redirect a portion of the annual ₹2 lakh crore chemical fertilizer subsidy towards organic alternatives, thereby improving soil health, reducing import dependency, and promoting climate-smart agriculture. The current allocation for organic manure development is deemed insufficient.

Carbon Monetisation Drive

The association also called for enabling carbon monetisation for biogas producers. By developing a framework for selling carbon credits on domestic and international platforms, IBA believes biogas projects can gain significant financial viability. Even at a conservative valuation of $5 per tonne of CO2, carbon credits could add an estimated ₹10-12 per kg of methane produced, potentially generating around ₹4,000 crore by 2030 with an estimated 1,000 CBG plants.