New Delhi, Dec 21 (AHN) India's biogas sector is expected to attract an investment exceeding Rs 5,000 crore during the financial year 2026-27 on the back of rising market demand for gas, according to the Indian Biogas Association (IBA).

According to government data, 94 compressed biogas (CBG) plants sold more than 31,400 tonnes of CBG during FY 2024-25, which reflects the growth in the sector and strong market uptake, the IBA said in a statement.

The IBA expects significant commissioning of new CBG facilities, effective and organised supply chains for feedstock, and unified and integrated policy frameworks to support the rapid adoption of biogas.

There is also ample scope for efficiency improvement and capacity utilisation in the several million small-scale traditional biogas digesters, and the country programmes are scaling up support for the various medium-sized plants which offer the benefits of cleaner cooking fuel, rural employment and organic manure, the statement added.

"The relaxed GST regime is going to augur ease of doing business in the CBG ecosystem. We anticipate that a reduction of 7 per cent in the applicable GST rate for the CBG sector shall significantly improve project viability, and the direct impact would translate into a 45 per cent increase in new investments in the industry over the short to medium term," IBA Chairman Gaurav Kedia said.

"Indirectly across the industry value chain, the multiplier effect would be much larger,” he added.

CBG, a renewable, green fuel made by purifying and compressing biogas from organic waste (like farm waste, dung, sewage) to be identical to Compressed Natural Gas (CNG). It's a key part of India's strategy to reduce oil imports, manage waste responsibly, cut emissions, and boost rural economies, with government schemes like SATAT promoting its production and use as a clean alternative fuel for vehicles, industries, and cooking.

The Ministry of New and Renewable Energy (MNRE) currently provides central financial assistance covering 15–20 per cent of a project’s capital cost. Additionally, marketing development assistance of Rs 1.50 per kilogram is offered to promote the offtake of organic fertilisers, a key byproduct of biogas plants. There are also incentives for pipeline laying to connect plants to the gas grid.