Increased MSME financing to boost biogas industry

New Delhi

The Indian Biogas Association (IBA) on Sunday has welcomed the proposed increase in MSME financing in the 2025 Union Budget, calling it a crucial step for the growth of the biogas and compressed biogas (CBG) industry.

The revised MSME Credit Guarantee Scheme, which raises the credit guarantee cover from ₹5 crore to ₹10 crore, will help biogas developers secure loans without collateral. Additionally, the updated MSME classification criteria now allow for 2-2.5 times higher investment and turnover limits, making larger-capacity CBG projects eligible for incentives.

While these budget measures support MSMEs, the IBA stressed the need for specific policies targeting the CBG sector. The association has urged the government to create a framework enabling biogas plant owners to sell carbon credits on domestic and international platforms, improving financial sustainability while aiding climate goals.

IBA also suggested expanding agricultural residue collection funding, subsidizing transportation costs, and implementing Haryana’s anti-crop burning scheme nationwide. To further encourage investment, the association recommended a corporate tax holiday for CBG producers. Though tax incentives may lead to short-term revenue losses, IBA estimates that 100 commercial plants could generate ₹1,200 crore in revenue in FY25, driving long-term economic and environmental benefits.

Overall, the budget’s focus on credit access, green energy, and entrepreneurship is expected to boost sustainability and strengthen India’s clean energy sector.