msme-credit-boost-to-fuel-india-s-biogas-growth

The Indian Biogas Association (IBA) has welcomed the proposed increase in MSME financing in the General Budget 2025, calling it a positive step towards boosting the country’s biogas industry.

 

The industry has long struggled with access to credit under reasonable terms, and the enhanced credit guarantee scheme is expected to ease financial constraints for compressed biogas (CBG) developers.

 

According to the IBA, the Budget’s focus on manufacturing, green energy, and digital transformation lays the groundwork for an Aatmanirbhar and Viksit Bharat.

 

The expansion of the MSME Credit Guarantee Scheme, which raises the credit guarantee cover from ₹5 crore to ₹10 crore, will provide greater access to collateral-free loans, reducing financial barriers for businesses in the biogas sector.

 

The revised classification criteria for MSMEs, which allow for 2 to 2.5 times higher investment and turnover limits than before, further strengthen support for the industry.

 

With these changes, even larger-capacity CBG projects can now qualify for benefits under the MSME framework, improving their financial feasibility.

 

While the Budget takes significant steps to support the MSME sector, the IBA noted that additional policy measures specific to the CBG industry would have further strengthened the sector’s growth.

 

The association has urged the government to develop a framework that enables biogas plant developers to sell carbon credits on both domestic and international platforms.

 

This move, it stated, would enhance financial viability while contributing to India’s climate goals.

 

The IBA also suggested that government policies should include funding for the collection of agricultural residues, subsidised transportation costs, and the nationwide expansion of the anti-crop burning scheme, which is currently implemented in Haryana.

 

These measures, it argued, would provide essential raw materials for CBG production while addressing environmental concerns.

 

To stimulate investment in CBG production, the IBA proposed introducing a corporate tax holiday for the sector.

 

It suggested that while tax incentives might lead to short-term revenue losses, they would drive long-term gains by encouraging investment, creating jobs, and promoting cleaner energy.

 

The association highlighted that the sector is expected to generate around Rs 1,200 crore in revenue in the 2025 financial year from approximately 100 commercial biogas plants.