Increase in MSME financing right step to boost biogas industry, says IBA

Indian Biogas Association (IBA) on Sunday said the proposed increase in MSME financing in the General Budget 2025 is a right step to boost biogas industry.

With a strong push for manufacturing, green energy, and digital transformation, this Budget sets the stage for Aatmanirbhar and Viksit Bharat, an IBA statement said.

From the standpoint of the fledgling biogas/CBG (compressed biogas) industry, the announced increase to the MSME Credit Guarantee Scheme will significantly benefit the biogas industry, which often faces challenge in securing credit with reasonable terms, it noted.

By expanding the credit guarantee cover from Rs 5-10 crore, the scheme ensures easier access to collateral-free loans, thus reducing financial barriers for the CBG developers, it pointed out.

Additionally, the revised MSME classification criteria allow for almost 2-2.5 times higher investment and turnover limits as compared to earlier regime.

The amendment ensures that now even the larger-capacity CBG projects are eligible for these incentives, it noted.

While the recent Budget takes adequate steps in supporting the MSME sector, inclusion of specific policy measures for the CBG industry would have made it even more conducive for the sector, it suggested.

So, to foster the growth of the biogas and CBG producers, the IBA has already requested the Indian government for development of a framework that allows the biogas plant promoters to sell carbon credits in both international and domestic platforms, enhancing financial viability and aiding climate targets, it stated.

The policies further must include funding for collection of agricultural residues, subsidised transportation costs, and expansion of the anti-crop burning scheme as that existing in Haryana to the rest of the country, it suggested.

Investment in CBG production would be stimulated through a corporate tax holiday and, in turn, investment would boost employment and cleaner energy, it also suggested.

Tax incentives would yield losses in the short-term, but with CBG producers, about 100 commercial plants generating Rs 1,200 crore in FY25, there will be long-term benefits.

These steps will greatly enhance sustainability, economic development, and elevate India's clean energy standing, it said.

Overall, the recently presented Indian Budget is a consumption-driven blueprint that gives the economy a much-needed push by increasing domestic demand, improving credit access, and encouraging entrepreneurship, it added.