GOBARdhan Scheme Approved: What Govt's Rs 23,731 Crore CBG Push Means For CNG Vehicles

CNG vehicle owners in India will start seeing a growing share of Compressed Biogas, better known as bio-CNG or CBG, mixed into their CNG supply in the near future, after the Union Cabinet approved the GOBARdhan scheme with a total outlay of Rs 23,731 crore. This needs no changes to vehicles or fuelling infrastructure, since purified CBG is chemically almost identical to natural gas.

The GOBARdhan scheme, which is officially known as the National Circular Bioenergy Scheme will run from FY2026-27 to FY2035-36 under the Ministry of Petroleum and Natural Gas. It builds on earlier programmes such as SATAT and the National Bioenergy Programme, which have already enabled the commissioning of more than 200 CBG plants across the country.

Image Source: PTI

City Gas Distribution entities must now meet a notified CBG blending obligation across CNG and domestic PNG segments, rising from 3% in FY2026-27 to 5% by FY2028-29. The approach to CBG Blending mirrors the government's E20 ethanol programme for petrol. As with E20, how much CBG actually reaches CNG vehicle owners will depend on how quickly new CBG plants get built and connected to city gas networks.

However, unlike ethanol-blended petrol, where compatibility depends on the blend percentage, existing CNG cars and commercial vehicles can run on CBG-blended CNG as is as both CNG and CBG are in essence methane.

The push comes as India's energy import bill has climbed sharply. Net oil and gas imports rose to $13.1 billion in June, driven largely by the West Asia conflict pushing up crude and LNG prices. India still sources roughly half its natural gas as LNG, much of it routed through the Hormuz Strait, leaving CNG supply exposed to the same price shocks.

Domestic CBG production is meant to blunt that exposure. With an administered price of Rs 2,110 per Metric Million British Thermal Unit set for a minimum ten years regardless of global gas prices, and every tonne of locally-produced CBG blended into the network is a tonne of LNG India does not have to import. With the scheme targeting nearly ten-fold growth in domestic CBG output, the Government's intent is to shrink that import dependence.

The timing of the new CBG push from the government lines up with a rapidly expanding CNG vehicle base. Major carmakers like Maruti Suzuki, Tata Motors, Hyundai and Toyota have all widened their CNG line-ups in recent years, with Maruti now offering CNG across most of its passenger vehicle range and Tata extending its iCNG portfolio to turbocharged engines. More manufacturers have new CNG-powered launches planned with natural gas now powering more new passenger vehicles than diesel.

Maruti Suzuki has already moved on the supply side too. The board of the nation's largest carmaker recently approved Rs 561 crore for four CBG projects in the first phase, based on a pilot study conducted by its parent company Suzuki Motor Corp in Gujarat. This will ensure that Maruti Suzuki will be an early beneficiary of the GOBARdhan scheme's capital assistance component.

That capital assistance covers up to Rs 2 crore per ton per day of installed capacity for eligible greenfield CBG projects, with brownfield expansions also eligible. Pipeline connectivity, MSME credit guarantees and a district-level Ecosystem Challenge Fund round out the remaining components of the GOBARdhan scheme.