The proposed excise duty waiver on biogas blended in compressed natural gas, coupled with a clear policy line, can unlock potential investment of ₹1 lakh crore in the country, Indian Biogas Association (IBA) said on Sunday.
The government in the recently announced Union Budget 2026, provided an excise duty waiver on Compressed Biogas (CBG) blended with Compressed Natural Gas (CNG), which is an important step forward in India’s energy transition towards 2070 Net Zero target, an IBA statement said.
According to the statement, quantitatively, if city gas distribution (CGD) networks achieve even a 5 per cent biogas blending level nationwide over the next five years, it will require about 2.5-3 MMTPA of CBG.
“This itself could lead to investments of ₹45,000-55,000 crore. If there is a clear policy and predictable prices, blending could realistically grow to 7-8 per cent by 2032. This would double the investment potential to almost ₹ 1 lakh crore,” it said.
This initiative (waiver) not only implies a reduction in gas prices; it also changes few dynamics of the biogas sector such as speeding up private investment, making energy more secure, and has measurable benefits for the climate and rural development, it noted.
The excise waiver fixes a long-standing imbalance: CBG is a renewable fuel that is better for the environment, but it was taxed the same way as CNG, it opined.
Waiving the excise part on the biogas of the blended fuel makes it instantly more cost-effective.
For CGD companies, this means lower weighted-average fuel costs.
For consumers, it means prices stay the same or go down. For producers, it means guaranteed sales and bankable revenue streams, it stated.
India’s CBG potential is considered to be about 60 million tonnes per year, based on organic wastes like paddy straw, press mud, MSW, and cattle dung.
The excise waiver should significantly raise project internal rates of return (IRR) for typical 4.8-10 TPD plants, depending on the mix of feedstock and logistics, it stated.
This improvement is sufficient to unlock financing for projects that were previously marginal, it stated.
CBG cuts greenhouse gas emissions by 70-90 per cent over its whole life cycle, especially when it is made from agricultural waste.
A 10 per cent blend could lower emissions by 12-15 million tons of CO2-equivalent every year, it added.
