Biodiesel and Agriculture Industry

The agriculture sector figures among the most important industries of India. It contributes almost 18% to country’s GDP. It is one of the biggest employers of the nation, employing almost 60% of the Indian population.The country has seen tremendous overall economic growth in last few decades. But agriculture sector has remained somewhat a mute spectator to this growth story as the growth of this sector has stagnated. Thus, casting a shadow over the future of almost 70% Indian households that rely primarily on agriculture for their survival. This scenario has created a need to open and develop new avenues for farmers to boost to their income and push the overall agriculture growth.

In India’s bid to become self-reliant in terms of energy security, cut its carbon footprints and save some precious foreign exchange, Biofuel is as a potential solution, which can help get all these goals in the long run, besides providing a major boost to agriculture sector.

Let’s have a look at how helpful biodiesel can really be in uplifting the country’s agriculture sector and addressing India’s energy problems.

Mutual Growth

Growth of biodiesel and agriculture industry is interdependent since these sectors share a mutual relationship. For agriculture is a main provider of feedstock for producing biodiesel and biodiesel industry can help generate extra income for farmers by sourcing the feedstocks produced by farmers.

Biofuel availability and challenges: An overview

India’s National biofuel policy stipulates a blending target of 20% ethanol & 5% Biodiesel in Petrol and Diesel. But by 2019 only 0.14% of biodiesel blending rate could be achieved for on road transport. The reason for this dismal performance is mainly attributed to limited availability of feedstock and lack of dedicated and integrated supply chain. Bearing this fact in mind, the country needs to push its biofuel production very hard i.e. at least by 22% from the current levels.


India’s biodiesel industry though has been here for long but it’s still at a very nascent stage.  Production of biofuels in India has been grappling with multiple issues like lack of policy support, limited availability of feedstock and lack of competitive technology to name a few. India’s national biofuel policy 2018, targets 2 G and 3G categories of biofuel. Here G refers to generations. 1G refers to biofuel derived from edible sources like sugarcane, molasses, corn and edible oil seeds. 2G refers to non-edible sources like jatropha, used cooking oil, broken food grains, palm stearine etc and 3G refers to industrial wastes, solid municipal wastes etc. India’s national biofuel policy imposes restriction on use of 1G sources to discuss food security issues. Whereas to discuss the land availability issue, it discourages the use of agricultural land for cultivating non-edible crops. Instead it recommends use of wastelands for cultivation of non-edible crops to support biofuel production. Though the policy promises MSP for procurement of such crops, but the idea of taking so much pain to put wasteland to use instead of using agricultural land hasn’t really gone down well with the farmers and hence production of feedstock or fuel crops hasn’t really taken off in a big way.

Opportunity for Agriculture sector:

In the year 2018, India had six plants with joint annual production capacity of 650 million litres of biodiesel per year.  Next year it added another 190 million litres/annum. But to ramp up its biodiesel production at this scale, the country needs an enormous amount of feedstock or raw material for biofuel production. And this is where the agriculture sector can pitch in to aid the biodiesel industry by providing it the much-needed advice, so that both the sectors can flourish ahead.

Benefits for agriculture Sector:

Though the growth of biodiesel industry has been slow in India, compared to other developing nations. But the country is gradually waking up to the demands and needs of this renewable energy sector. Giving a booster to Biodiesel sector can benefit agriculture sector immensely. Since biodiesel industry relies heavily on agriculture for availability of feedstocks, it’s growth can bring private and public investment in rural areas. Which in turn, will generate huge employment opportunities for farmers and landless labourers. Production of more feedstock would mean better use of under utilised agriculture land, improve diversification of land uses etc., which will ultimately improve the economic prospects of rural India.

Good times ahead

Development of biodiesel and agriculture industry in India can go hand in-hand provided other constraints in terms of policy support, technology support and supply chain etc. addressed in a timely and efficient way. Also, there is a need to incentivize both the biofuel producers and farmers. This way more players will be encouraged to venture in this field and work their way towards achieving India’s energy security goals.

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