India is making progress in biofuels, but shortages of suitable feedstocks could limit the expansion of its biodiesel blending programme, according to a US Department of Agriculture (USDA) report.
The USDA’s Foreign Agricultural Service, in its July 23 India – Biofuels Annual report, said biodiesel blending in India is expected to remain below 1% in 2026, well short of the government’s 5% target for 2030, Oils & Fats International reported.
Feedstock availability is the biggest constraint to higher biodiesel production, the report said. India’s biodiesel industry uses a range of raw materials, including animal fats, non-edible oils, used cooking oil (UCO), imported palm oil and palm stearin.
Although UCO consumption has reached record levels, collecting it remains difficult because of logistical challenges. Its availability is also expected to rise only marginally as domestic edible oil production is projected to decline in 2026.
Edible oil imports are also expected to fall amid geopolitical instability in West Asia, further limiting the availability of potential biodiesel feedstocks.
Despite these constraints, India’s biodiesel production is forecast to rise 15% to 640 million litres in 2026 from a revised 556 million litres in 2025. Consumption is projected to increase by about 18% to 560 million litres from 475 million litres.
India has around 2 billion litres of installed biodiesel production capacity, but only about one-third of the capacity is being utilised because of feedstock shortages. Palm stearin use is also increasing in 2026, although it remains below historical levels because of lower Indonesian exports.
Biodiesel imports remained negligible in 2025 and are expected to stay low this year. Exports, however, are forecast to rise to 110 million litres in 2026 from 76 million litres in 2025, supported by higher demand from the European Union as it seeks to offset lower imports from Argentina.
SAF sector expands
India is also moving ahead with sustainable aviation fuel (SAF), with mandatory blending targets for international flights set at 1% from 2027 and rising to 5% by 2030.
Indian Oil Corporation received India’s first international certification for SAF in December 2025 and currently has production capacity of 30,000 tonnes a year, according to the USDA report.
India’s large edible oil market gives it an advantage in producing hydrotreated esters and fatty acids (HEFA)-based SAF from UCO. However, the collection of used cooking oil from industrial facilities and households remains a major challenge for the sector.
The report also noted progress in sustainable maritime fuels. A major Indian port has achieved a standard that could support the availability of around 500,000 tonnes of methanol by 2028-29.
The USDA said these developments, alongside India’s progress in renewable energy, are positioning the country as a regional leader in transportation fuel innovation.
