New Delhi, February 22 (IANS). The proposed excise duty exemption on biogas mixed with compressed natural gas (CNG) is likely to bring investment of up to Rs 1 lakh crore in India. This information was given by the Indian Biogas Association (IBA) on Sunday.
The industry body said the move, announced in the recently presented Union Budget 2026, is a major step towards promoting clean energy and supporting India’s net zero target by 2070.
According to IBA, excise duty exemption on Compressed Biogas (CBG) blended with CNG will improve the financial feasibility of projects and attract large-scale private investment.
The association said that even if city gas distribution networks across the country achieve just 5 per cent blending of biogas in the next five years, it will require about 2.5 to 3 million metric tonnes (MMTPA) of CBG annually.
This alone can generate investment of Rs 45,000 crore to Rs 55,000 crore.
IBA said if the government provides a clear and stable policy framework and predictable pricing regime, the mix level can increase to 7-8 per cent by 2032.
In such a situation, the total investment potential can almost double to Rs 1 lakh crore.
IBA said this excise exemption removes the long-standing inequity as CBG, despite being a renewable and environment-friendly fuel, was earlier in the same tax bracket as CNG.
Removing excise on biogas component in blended fuel will make it more economical.
For city gas distribution companies, this will mean lower average fuel costs. Consumers may benefit from stable or lower gas prices, while producers will enjoy assured sales and a steady source of income.
According to IBA, this policy change could accelerate private investment, strengthen energy security and also boost rural development.
India has the potential to produce about 60 million tonnes of CBG annually from organic waste like paddy straw, press mud, municipal solid waste and cow dung.
The excise exemption is expected to improve the internal rate of return (IRR) for typical plants with a capacity of 4.8 to 10 tonnes per day, depending on feedstock and logistics.
Projects that were not economically viable before this reform may now get help in getting financing.
CBG can reduce greenhouse gas emissions by 70 to 90 percent over its entire lifecycle, especially when produced from agricultural waste.
IBA said that if the 10 per cent blending level is achieved, it could result in a reduction of 12 to 15 million tonnes of carbon dioxide (CO2)-equivalent carbon emissions every year, which would be a major step towards India’s climate goals.
–IANS
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