IBA proposes ₹10,000cr fund to boost India's biogas sector
What's the story
The Indian Biogas Association (IBA) has proposed a ₹10,000 crore fund to provide capital subsidy for the biogas industry in the upcoming Union Budget. The IBA also suggested that the government should raise the subsidy by 50% to ₹6 crore per 4.8 tons per day (TPD) of compressed biogas (CBG). It further recommended capping this increase at ₹25 crore per project.
Fiscal support
IBA's recommendations for Union Budget 2026
In its recommendations for the Union Budget 2026, the IBA has called for greater fiscal support and faster implementation of policies to unlock large-scale private investment and rural income opportunities. The association also wants project incentives to be scaled up by raising Central Financial Assistance (CFA). This comes as CBG plant's capital expenditure (capex) has increased by over 50% since CFA subsidy scheme was launched in 2014.
Subsidy adjustments
Current CFA and proposed increases
Currently, the CFA provides ₹4 crore per 4.8 TPD setup with a project cap of ₹10 crore. The IBA has suggested that this capital subsidy be raised to at least ₹6 crore per 4.8 TPD of CBG production capacity and the CFA upper limit be raised to ₹25 crore for projects up to 20 TPD, with a minimum corpus of ₹10,000 crore.
Subsidy reallocation
IBA's proposal for fertilizer subsidy redirection
The IBA has also proposed that a small portion (10% or ₹20,000-25,000 crore) of the chemical fertilizer subsidy be redirected toward FOM-linked or carbon-based incentives within Nature Based Solution (NBS) or a similar subsidy window. This move may improve soil health, reduce import dependency, and promote climate-smart agricultural practices. The association has also called for carbon monetization through the Green Certificate mechanism.
Carbon credits
Suggestion for carbon credit sale
To support the growth of biogas and CBG producers, the IBA has suggested that the Centre should create a framework for biogas plant promoters to sell carbon credits on international and domestic platforms. This would not only help the government achieve its climate change targets but also provide different revenue channels for producers. The transfer of carbon credits into voluntary carbon market is expected to significantly boost financial viability of these projects.