New Delhi: India’s transition towards cleaner and more sustainable energy sources received a fresh boost in the Union Budget 2026, with the government announcing the phased blending of Compressed Bio-Gas (CBG) into Compressed Natural Gas (CNG) used in the transport sector. The move follows the nationwide introduction of 20 per cent ethanol-blended petrol (E20) from April 1, 2025, and signals the next stage of the country’s clean-fuel roadmap.
Presenting the Budget, Finance Minister Nirmala Sitharaman said the new policy will be implemented in phases and will extend not only to CNG but also to Piped Natural Gas (PNG). The initiative is aimed at reducing India’s dependence on fossil fuels, cutting carbon emissions, and strengthening domestic bio-energy production by utilising agricultural and organic waste.
The decision to introduce CBG blending with CNG and PNG is being viewed as a major policy shift for both the energy and automotive sectors. Much like the ethanol blending programme, the new initiative is expected to lower greenhouse gas emissions, curb natural gas imports, and provide farmers with an additional income stream through the use of crop residue and other bio-waste.
For the automotive industry, the move represents India’s second large-scale blended-fuel transition after E20, reinforcing the government’s long-term commitment to cleaner mobility solutions.
Alongside bio-gas blending, the Budget reaffirmed the government’s focus on expanding India’s electric vehicle ecosystem. Emphasizing the importance of sustainable transport, the finance minister announced enhanced support for EV manufacturing and the expansion of charging infrastructure across the country.
A notable announcement was the introduction of a strengthened payment security mechanism to promote the adoption of electric buses in public transport systems. This framework is expected to encourage state and city transport undertakings to transition to e-buses by reducing financial risks and improving viability.
The Budget also unveiled significant measures to strengthen domestic battery production. To support EV battery manufacturing, 35 additional capital goods have been added to the customs duty exemption list, while 28 more items have been exempted for mobile phone battery production.
Further, the government has proposed a complete exemption from Basic Customs Duty on cobalt powder, lithium-ion battery scrap, lead, zinc, and 12 other critical minerals. This builds on the July 2024 Budget, which had exempted 25 critical minerals, and is expected to improve India’s access to essential raw materials while reducing supply-chain vulnerabilities.
In a key relief measure, the finance minister announced that interest awarded by Motor Accident Claims Tribunals to individuals will be fully exempt from income tax. The exemption will apply without any deduction of tax at source (TDS), providing much-needed financial relief to accident victims and their families.
With its combined focus on cleaner fuels, electric mobility, domestic manufacturing, and social welfare, the Union Budget 2026 underlines the government’s effort to balance economic growth with environmental sustainability and public interest.