India will target 5% Bio-CNG blending from FY2028-29. The government has approved a Rs 23,731 crore national scheme. Existing CNG cars can use blended fuel without major changes.
India is planning a major change to its CNG fuel mix over the next few years. After pushing ethanol blending in petrol, the government is now focusing on increasing the use of Compressed Biogas (CBG), also known as Bio-CNG, in the country's natural gas supply.
The Union Cabinet has approved the GOBARdhan National Circular Bioenergy Scheme with a total outlay of Rs 23,731 crore. Under the plan, Bio-CNG blending in the country's gas supply will gradually increase before reaching 5% from FY2028-29.
Bio-CNG Blending to Increase Gradually
The government has set a phased target for Bio-CNG blending. The blending level will start at 3% in FY2026-27, increase to 4% in FY2027-28 and reach 5% from FY2028-29 onwards.
The plan is aimed at creating steady demand for domestically produced Bio-CNG and encouraging companies to invest in new production plants. The GOBARdhan scheme will run from FY2026-27 to FY2035-36.
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What Is Bio-CNG?
Bio-CNG is produced by processing organic waste such as cattle dung, crop residue, food waste, municipal waste and sugar mill waste. After purification, the resulting gas has properties similar to natural gas. This makes it possible to supply Bio-CNG through existing gas distribution networks. For CNG vehicle owners, this is particularly important because vehicles can use the blended gas without major changes to their existing fuel systems.
What Will Change for CNG Cars?
For people who already own a CNG car, the move is not expected to require any hardware changes. As Bio-CNG is similar to conventional natural gas, existing CNG vehicles can run on the blended fuel. CNG stations can also gradually increase the amount of Bio-CNG in their fuel supply as the blending targets rise.
This could make the CNG fuel used by cars and commercial vehicles progressively cleaner. The impact will also be relevant for carmakers as CNG continues to grow in popularity in India. Manufacturers including Maruti Suzuki, Tata Motors, Hyundai and Toyota already offer several factory-fitted CNG models.
Government Offers Support to Bio-CNG Producers
One of the main challenges for India's Bio-CNG industry has been the financial viability of new projects. The new scheme attempts to address this by providing financial and infrastructure support.
Eligible greenfield CBG projects can 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 government has also introduced an administered CBG price of Rs 2,110 per MMBTU, giving producers better visibility over future revenue.
Assured Demand for Bio-CNG
The government will also create an assured offtake mechanism for Bio-CNG. City Gas Distribution companies will procure CBG to meet the notified blending targets. This should give producers a more reliable market for their fuel.
The scheme also includes support for pipeline connectivity, credit guarantees for MSMEs and a challenge fund for better feedstock collection and technology adoption. These measures are expected to encourage more companies to set up Bio-CNG plants across the country.
Could Reduce Gas Imports
The increased use of domestic Bio-CNG could also help reduce India's dependence on imported natural gas. At the same time, the scheme gives agricultural and municipal waste a useful purpose. Crop residue, cattle dung and other organic waste can be converted into fuel instead of being discarded or burned. This could create benefits for both the energy and agriculture sectors while supporting India's clean mobility goals.
Execution Will Be Key
India has already commissioned more than 200 CBG plants through earlier initiatives such as SATAT and the National Bioenergy Programme. However, the sector has faced challenges related to financing, feedstock collection, transportation and pipeline connectivity. The new GOBARdhan scheme brings several of these areas together under one framework.
If implementation stays on track, 5% Bio-CNG blending from FY2028-29 could mark an important step for India's CNG market. For CNG car owners, the biggest advantage is that the shift can happen without requiring a change to their existing vehicles.
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