India’s growing energy needs, driven by rapid urbanization and industrial growth, have put a severe strain on fossil fuel resources. With over 80% of its crude oil being imported, the country faces economic as well as environmental challenges. Amidst this, biodiesel has emerged as a sustainable alternative to fossil fuels. Derived from organic sources like vegetable oils and animal fats, biodiesel is renewable, biodegradable, and significantly reduces carbon emissions.
The Indian government has set an ambitious target of achieving 5% biodiesel blending in diesel by 2030 under its National Policy on Biofuels. While the goal is clear, the journey involves numerous policy, technological, and economic challenges. This article explores the current status of biodiesel plants in India, their feedstocks, benefits, bottlenecks, and what the future holds.
Policy Framework & Government Targets
The National Biofuel Policy 2018 provides a robust framework for the promotion of biofuels in India. Key features include:
- Blending Targets: 20% ethanol blending in petrol and 5% biodiesel blending in diesel by 2030.
- Feedstock Diversification: Encouraging the use of non-edible oils, used cooking oil (UCO), and industrial waste for biodiesel.
- Financial Incentives: Capital subsidies and viability gap funding for setting up biofuel plants.
According to India Ratings and Research (Ind-Ra), achieving the 5% biodiesel blending target by 2030 will require an investment of over INR 2,500 crore. Public Sector Undertakings (PSUs) like IOCL, BPCL, and HPCL are mandated to procure biodiesel from approved suppliers, but enforcement remains weak.
States like Gujarat, Karnataka, and Rajasthan have also introduced state-specific policies offering additional incentives and subsidies to biodiesel producers.
Biodiesel Market Size & Growth in India
India’s biodiesel market was valued at approximately US$462 million in 2024 and is expected to reach US$936 million by 2033, growing at a CAGR of around 7.8%. Currently, there are about 36 registered biodiesel producers across the country with a combined capacity of around 1.2 million tonnes per annum.
The rising demand for cleaner fuels, coupled with increasing awareness of environmental issues, is likely to drive further growth. Additionally, the rise of commercial vehicles, which are major diesel consumers, makes biodiesel a practical choice for decarbonizing the transport sector.
Major Biodiesel Plants in India
India’s biodiesel production is spread across multiple states. Below are some of the prominent plants:
Andhra Pradesh
- Universal Biofuels Pvt. Ltd. (Kakinada): One of the largest, with a capacity of 200 TPD. Exports to US and Europe.
Gujarat
- Yamuna Bio Energy
- Ruchi Soya Industries
West Bengal
- Emami Biotech Ltd.
- Coastal Energy Ltd.
Maharashtra
- Washwell Biodiesel (Pune): Specializes in biodiesel made from UCO.
- Monopoly Innovations
- Global Green Fuels
Rajasthan
- Unicon Biofuels
- Rajputana Biofuels
- Kotiar Biofuels
Uttar Pradesh
- Kissan Agro
- Al Noor Biodiesel
Karnataka
- Green Fuels Pvt. Ltd.
Haryana
- BioD Energy India Pvt. Ltd.
- Nova Biofuels
Chhattisgarh
- CREDA (Chhattisgarh Renewable Energy Development Agency): Promoting jatropha-based biodiesel.
Feedstocks Used in Biodiesel Production
India’s biodiesel feedstock base includes:
- Used Cooking Oil (UCO): Collected via FSSAI’s RUCO initiative.
- Non-edible Oils: Jatropha, Pongamia, Neem, Castor.
- Animal Fats & Tallow: Used in specific industrial biodiesel blends.
- Algae and Waste Oils: In early R&D stages.
The RUCO (Repurpose Used Cooking Oil) program is crucial for sourcing UCO from restaurants, hotels, and households. However, the collection mechanism is still weak and needs strengthening.
Environmental & Economic Benefits
Biodiesel offers a range of benefits:
- Reduces CO₂ emissions by up to 80% compared to diesel.
- Biodegradable & non-toxic.
- Boosts rural employment by encouraging cultivation of non-edible oil crops.
- Reduces dependence on crude oil imports.
- Improves engine lubrication and extends life.
Biodiesel also fits into India’s circular economy goals by utilizing waste materials like UCO, which would otherwise clog drains or be illegally reused.
Challenges Facing the Biodiesel Sector
Despite its potential, biodiesel production in India faces multiple challenges:
- Feedstock availability: Limited collection of UCO and low yields of jatropha.
- High production cost compared to conventional diesel.
- Lack of blending enforcement by oil marketing companies.
- Low public awareness about biodiesel benefits.
- Technological constraints in small and medium-scale plants.
The market is further hampered by inconsistent policy implementation and lack of long-term purchase agreements from OMCs.
Future Prospects
India has a significant opportunity to become a biodiesel leader in Asia. Key future drivers include:
- Increased investment in infrastructure: Estimated ₹2,500 crore needed.
- Technology adoption: Enzyme-based processing, microalgae research.
- Second-generation biofuels: From agri-residues, being tested by IOCL and BPCL.
- Private-Public Partnerships: To scale up collection and processing.
- Export potential: Especially to countries with strict emission norms.
The government is also exploring mandatory procurement norms for biodiesel blending to stabilize the market.
Recommendations for Growth
- Strengthen RUCO network: Improve UCO collection logistics.
- Subsidies for non-edible oil plantations: Especially in arid zones.
- Public awareness campaigns: Educate fleet operators, farmers, and consumers.
- Simplify licensing and GST norms: Encourage small-scale producers.
- Collaborate with automotive industry: Promote biodiesel-compatible engines.
Conclusion
Biodiesel holds immense promise for a sustainable and self-reliant India. With rising fuel demands and environmental concerns, transitioning towards biofuels is no longer optional — it’s essential.
While challenges persist, policy support, technological innovation, and public-private collaboration can make biodiesel a mainstream alternative. The future is green, and biodiesel plants across India will play a vital role in powering that transformation.
