Budget 2026: IBA Advocates for Rs 10,000 Crore Subsidy Fund to Boost CBG and Organic Manure Support
The Indian Biogas Association (IBA) is advocating for a substantial Rs 10,000 crore fund aimed at bolstering the biogas industry in the upcoming Union Budget 2026. The association is urging the government to enhance fiscal support to stimulate investment, improve project viability, and promote the adoption of green energy solutions. Key recommendations include increasing the capital subsidy for compressed biogas (CBG) plants and revising existing subsidy norms to reflect rising costs in the sector.
Proposed Capital Subsidy Increases
In its recommendations, the IBA has called for a 50 percent increase in the capital subsidy for CBG plants, raising it to Rs 6 crore for facilities with a capacity of 4.8 tonnes per day (TPD). The association also seeks to raise the upper limit for subsidies from Rs 10 crore to Rs 25 crore per project. Currently, the subsidy stands at Rs 4 crore for the same capacity. The IBA plans to present these proposals to the Ministry of New & Renewable Energy and the Ministry of Finance, emphasizing the need for enhanced financial support as the industry faces rising capital expenditure costs, which have surged by over 50 percent since the Central Financial Assistance (CFA) scheme was introduced in 2014.
Strengthening Green Growth Initiatives
The IBA envisions the biogas and CBG sector as a crucial component of India’s green growth strategy. To realize this vision, the association is advocating for deeper fiscal support, expedited project implementation, and improved access to financing. These measures are essential to unlock private investments and create income opportunities in rural areas. The IBA has also proposed increasing project incentives through higher CFA levels and has suggested a mandatory blending of fermented organic manure (FOM) in fertilizer use, aiming for at least 5 percent by 2028 and 10 percent by 2030.
Redirecting Subsidies for Soil Health
Highlighting the government’s annual Rs 2 lakh crore chemical fertilizer subsidy, the IBA argues that a mere 10 percent redirection of these funds—amounting to Rs 20,000–25,000 crore—towards FOM-linked incentives could significantly enhance soil health, reduce dependency on imports, and promote climate-smart agricultural practices. The association has criticized the current allocation of Rs 1,450 crore over three years for Market Development Assistance (MDA) for organic manure from CBG plants, labeling it as insufficient compared to the chemical fertilizer subsidies.
Carbon Monetization and Market Opportunities
The IBA is also pushing for carbon monetization through a Green Certificate mechanism, which would enable biogas and CBG producers to sell carbon credits in both domestic and international markets. This initiative could help the country meet its climate targets while providing new revenue streams for producers. The association estimates that with around 1,000 CBG plants expected by 2030, the market value of CBG-based green certificates could reach approximately Rs 4,000 crore. Additionally, the IBA has suggested implementing ‘cap and trade’ practices for carbon-intensive industries and subsidizing part of the proposed carbon pricing mechanism to facilitate the establishment of this system.
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