India’s renewable energy sector has witnessed significant growth, with solar energy, wind power, and bioethanol leading the charge. Now, the next frontier for growth within this sector is biodiesel, a critical element in India’s push for carbon emission reduction and energy security.
India’s commitment to achieving Net Zero Emissions has positioned the country as a global leader in climate action. With substantial progress in solar, wind, and bioethanol industries, India is making strides towards its goal of reducing carbon emissions while maintaining sustainable development. Biodiesel, in particular, is gaining recognition worldwide as an essential tool to combat climate change. Made from renewable sources, biodiesel offers a cleaner alternative to traditional diesel and has the potential to replace imports in the long run, especially for developing nations like India.
India’s National Policy on Biofuels: A Catalyst for Biodiesel Growth
In 2021, India introduced the National Policy on Biofuels (NPB), which aims to contribute to national energy security, mitigate climate change, and create sustainable employment opportunities. Under the NPB, India has set ambitious targets for blending ethanol and biodiesel into petroleum-based fuels. The policy mandates a 20% blend of ethanol and biodiesel in diesel fuel, a move expected to significantly reduce carbon emissions and reduce the country’s dependence on crude oil imports.
To meet this blending target, India’s diesel consumption—currently around 1000 lakh metric tonnes annually—will require an estimated 200 lakh metric tonnes of biodiesel per year. The NPB has provided several incentives to promote renewable fuels like ethanol, biodiesel, biogas, and biomass. As India accelerates its focus on biodiesel, the sector is poised for rapid expansion.
Public Sector Oil Marketing Companies (OMCs) drive biodiesel demand
Under the NPB, biodiesel will be blended into diesel by Public Sector Oil Marketing Companies (PSU OMCs) such as Indian Oil, Bharat Petroleum, and Hindustan Petroleum. These companies have issued tenders for the purchase of biodiesel to support the Biodiesel Blending Program. The tenders offer a fixed price for biodiesel, ensuring that manufacturers can sell their entire production to the OMCs. This arrangement presents a significant opportunity for biodiesel producers, as it guarantees sales and provides a steady revenue stream.
To encourage biodiesel blending, the Indian government has announced a penalty of Rs 2 per litre for unblended diesel, effective from April 2025. This policy further incentivizes OMCs to adhere to blending targets, indirectly boosting demand for biodiesel.
Biodiesel manufacturing capacity: A major growth opportunity
Currently, there are only 36 certified biodiesel manufacturers in India, with a combined annual capacity of just 12 lakh metric tonnes. However, to meet the growing demand of 200 lakh metric tonnes by 2030, the sector will need to scale up significantly. This represents a vast opportunity for capacity expansion, as the government and private players work to fill the supply gap.
India’s biodiesel industry is set for rapid growth, driven by the government’s commitment to sustainable energy and the Biodiesel Blending Program. The expected increase in biodiesel production will reduce carbon dioxide emissions by approximately 400 lakh metric tonnes annually, contributing significantly to India’s Net Zero goals.
Economic and environmental benefits of biodiesel
Beyond environmental benefits, the implementation of the NPB’s biodiesel guidelines will have several positive economic impacts. These include creating rural employment, promoting carbon sequestration, and encouraging land development. The biodiesel sector is set to play a crucial role in India’s journey toward sustainable growth.
Key players and market outlook
Several key players are already capitalizing on this growing market, including Emami Limited, Kalesuwari Refineries, Monopoly Innovations, Universal, Biomax, and BioD Energy. Among the listed entities, Kotyark Industries Limited—which trades at ₹990 per share—and Rajputana Biofuels Limited, which recently saw its IPO oversubscribed by 730 times and is now trading at ₹260 per share, are making significant strides in the biodiesel sector.
With a strong push from the government, the biodiesel industry in India is poised for exponential growth, making it a key player in the country’s transition to cleaner, more sustainable energy solutions.
(Note: This article is based on the press release provided by India PR Distribution)
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