India is at a critical stage in its shift toward clean energy and could emerge as a global leader in biofuel innovation and exports, according to a recent NITI Aayog report titled “Scenarios towards Viksit Bharat and Net Zero; Sectoral Insights: Transport.”
The report notes that rising domestic demand, abundant agricultural and waste-based feedstocks, and expanding refining and distillery capacity give the country a strong foundation for growth in the biofuel sector. However, it cautions that achieving these goals will require substantial financial mobilisation, particularly across the power, industry, and transportation sectors.
One of India’s key strengths is the availability of feedstock. The country has one of the world’s largest sustainable biomass supplies, including ethanol feedstocks from sugarcane and grains, agricultural residues, municipal solid waste, used cooking oil, and waste-to-energy outputs from farm by-products. These resources are expected to strengthen supply stability while reducing long-term production costs.
The report also points to the ongoing expansion of distilleries, second-generation ethanol plants, and compressed biogas (CBG) units under the National Biofuel Policy. These developments are seen as supporting faster production growth while boosting rural incomes, reducing waste, and encouraging a circular economy.
India’s vast transportation network — covering road, rail, aviation, and shipping — provides the scale needed to support new biofuel technologies and lower costs. At the same time, growing demand for low-carbon fuels in regions such as Africa, Southeast Asia, and parts of Latin America could position India as both a technology provider and exporter.
The study outlines the country’s broader move away from fossil fuels toward a diversified low-carbon energy mix. While electric vehicles are gaining traction, they require heavy investment in charging infrastructure and battery supply chains. Hydrogen mobility and flex-fuel options remain in early stages of development. In contrast, ethanol, biodiesel, and CBG are viewed as immediately scalable solutions that can help cut emissions, reduce oil import dependence, and protect the environment.
To establish India as a global biofuel hub, the report recommends several measures. These include strengthening feedstock security by expanding systems to collect agricultural waste, incentivising farmers to supply residues, and promoting energy crop cultivation on degraded land.
It also calls for faster deployment of biorefineries producing second-generation ethanol, sustainable aviation fuel, and CBG, along with enabling co-processing of biofuels in petroleum refineries and providing viability-gap funding for early projects.
The report further stresses the need to align fuel standards with international norms, develop export-focused biofuel corridors, and pursue bilateral trade agreements. Enhancing green bond frameworks, deepening partnerships with multilateral climate organisations, and offering risk guarantees to attract private investment are also highlighted as priorities.
In addition, the study urges greater investment in research and development, including advanced enzymes, gasification technologies, and synthetic fuels. It recommends establishing public-private innovation clusters and encouraging collaboration with global clean technology firms.
Despite the strong outlook, the report underlines significant financing gaps that could slow progress, suggesting that foreign funding may play an important role in unlocking the full potential of India’s green transition.
