Biodiesel Industry – Scope and Challenges

Biodiesel industry in India – Challenges and scope

Despite being touted as a fuel that carries a lot of environmental and economic benefits, Biodiesel production in India still hasn’t really taken off at a pace it must. Indian government though, on its part is trying to clear the hurdles through policy interventions and incentives to accelerate the growth of biodiesel industry in the country. Here, we will discuss some challenges and scopes ahead for biodiesel industry at large.


Biodiesel Industry in India is still at a very nascent stage. It is combating multiple issues on various fronts. Despite putting all the plans and efforts in place, India has managed to meet only 2% ethanol blending in petrol and 0.1% biodiesel blending in diesel. Many factors are responsible for the dismal performance on this front. lack of scale, advanced technology and huge investment in R&D and high subsidies on fossil fuels, lack of awareness among common users with regards to use of biodiesel, etc. pose a huge challenge for companies venturing into biofuel production. Let’s have a look at these in brief.

Roadblocks hindering the growth of biodiesel industry in India

Lower supply of Resources: India lacks large supply of quality biomass for biofuel production. our experience has proved that to fulfil the biofuel need of a country like India, ethanol production based solely on sugarcane molasses is neither sufficient, nor economically viable or sustainable in long run. Also, jatropha based biodiesel production hasn’t really been that impressive. The land across India is intensively used and water resources are scared already. Hence, we need to look beyond and explore more of second-generation resources for like biomass for biodiesel production.

Lack of Advanced Technology and R&D: different regions in India have a great potential for supplying different types of feedstocks. But India lacks cost-effective technologies to convert biomass in to transportation fuels. Also, a lot of investment coupled with research and development is also required, which is a major obstacle in this direction.

High Subsidy on fossil fuels: the fossil fuel in India gets subsidised by government. Hence it becomes difficult for the players in cleaner fuel technologies to compete with conventional fuel suppliers due to higher production cost.

Lack of Awareness: Common users in India to a greater extent, are still unaware of the advantages and benefits of biodiesel as a transport fuel. A common perception is that use of biodiesel as vehicle fuel may cause damage to the engine and diminish its performance in the long run. Hence there is a need to generate awareness among people as regards the use of biodiesel as a clean, green and competitive fuel.


Biofuel as a clean fuel has greater potential in terms of sustainability, environmental benefits and energy security for a country like India. But translating it into reality would need a lot of effort. National biofuel policy (NBF, 2018) has set forth a target of 20% ethanol blending to petrol and 5% biodiesel to diesel by the year 2030. To meet the blending target set forth by National biofuel policy, India needs to increase its biofuel production capacity by 22% from current levels. India’s biofuel policy supports and encourages entry of new players in green space. Many new players have ventured in this space in last few years given the promising future and outlook. endeavours are on under the policy, to increase and incentivize cultivation of biomass to help increase biofuel production. Government has recently also hiked the procurement price of ethanol, meaning more encouragement to players engaged in its production. But the government needs to offer more of policy level support in terms of investment, R&D and technology to make the green fuel industry flourish at a faster pace.

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