India Biodiesel Market to Reach US$ 0.69 Billion by 2033, Driven by Clean Energy Goals and Decarbonization Push: Renub R

India Biodiesel Market Witnesses Steady Growth Amid Energy Transition

According to a recent report by Renub Research, the India Biodiesel Market is poised for substantial expansion, growing from US$ 0.37 Billion in 2024 to an estimated US$ 0.69 Billion by 2033, at a CAGR of 7.05% during the forecast period 2025–2033.

The growth is primarily fueled by the nation’s strategic shift toward renewable fuels, government support, and an increasing emphasis on decarbonizing the transportation and industrial sectors. As India aims to meet its clean energy commitments under the Paris Agreement and reduce its fossil fuel dependence, biodiesel is emerging as a key player in the country’s alternative energy mix.

Government Initiatives Accelerating Biodiesel Adoption

The Indian government has implemented several proactive policies to promote biofuels, particularly biodiesel. The National Policy on Biofuels 2018, revised in 2022, set ambitious targets for blending biodiesel with conventional diesel. This includes a 5% blending target by 2030, which is now being advanced in many states due to the urgent need to reduce carbon emissions and petroleum imports.

State-run oil marketing companies (OMCs) are being encouraged to procure biodiesel from domestic producers, thereby strengthening the supply chain and boosting local production. Further, the SATAT (Sustainable Alternative Towards Affordable Transportation) initiative and the Make in India program are also driving innovation and investment in biodiesel infrastructure and feedstock processing.

Rising Demand for Clean Transportation Fuel

India’s rapidly growing transportation sector is a major contributor to greenhouse gas emissions. With diesel being a dominant fuel source, especially in commercial vehicles, buses, and trains, biodiesel offers a viable and cleaner alternative.

Biodiesel blends can be used in existing diesel engines without modifications, making them highly attractive for fleet operators and logistics companies looking to reduce their carbon footprint. As sustainability becomes a central focus for both private enterprises and government bodies, the adoption of B5 and B10 blends is expected to scale significantly.

Additionally, Indian Railways has also undertaken pilot projects for biodiesel use in locomotives, signaling institutional support for greener transport solutions.

Industrial Sector Embracing Sustainable Alternatives

Beyond transportation, the industrial sector is increasingly turning to biodiesel for boiler heating, power generation, and off-grid energy needs, particularly in sectors such as textiles, food processing, cement, and chemicals. Biodiesel’s high cetane number, low sulfur content, and biodegradability make it an attractive option for industrial users striving to meet environmental compliance requirements and corporate ESG goals.

Several manufacturing units have started switching to bio-based fuels to align with carbon neutrality targets, reduce operational risks, and access green funding. This diversification of biodiesel usage is expected to widen the market base over the next decade.

Feedstock Availability Supporting Market Expansion

India is well-positioned to expand its biodiesel capacity, thanks to the availability of diverse feedstocks such as:

Used Cooking Oil (UCO)
Non-edible oil seeds (Jatropha, Pongamia, Mahua)
Animal fats
Algal oil
Waste vegetable oils

In particular, the UCO-to-biodiesel model is gaining momentum as it addresses two issues: waste management and fuel sustainability. Under the RUCO (Repurpose Used Cooking Oil) program launched by the Food Safety and Standards Authority of India (FSSAI), restaurant chains and bulk food establishments are encouraged to sell used cooking oil to biodiesel manufacturers, thus creating a robust circular economy.

The Indian government has also offered financial incentives, tax benefits, and capital subsidies to promote the collection, aggregation, and processing of feedstock into commercial-grade biodiesel.

Regional Markets Driving Growth

Certain Indian states are leading the charge in biodiesel production and usage. Maharashtra, Tamil Nadu, Gujarat, Karnataka, and Andhra Pradesh are key hubs due to their proactive biofuel policies, industrial presence, and better infrastructure.

Southern and western regions, with their strong agricultural base and industrial clusters, are expected to dominate biodiesel consumption in the coming years. Additionally, metropolitan areas like Delhi NCR, Mumbai, and Bengaluru are witnessing increasing biodiesel adoption in public transport fleets and urban logistics.

Opportunities in Public-Private Partnerships and Innovation

The India Biodiesel Market presents compelling opportunities for private players, startups, and foreign investors. Public-private partnerships (PPPs) are being encouraged to build decentralized biodiesel production units, especially in rural areas.

Innovations in second-generation biofuels, enzyme-based processing, and algae-derived biodiesel are gaining attention for their efficiency and scalability. Emerging technologies promise better conversion rates, lower feedstock costs, and greater environmental benefits.

As the government introduces supportive bioenergy RD policies, Indian firms have an opportunity to emerge as global leaders in sustainable fuel innovation.

Challenges: Policy Implementation and Price Competitiveness

Despite its promising outlook, the Indian biodiesel sector faces certain headwinds:

Inconsistent enforcement of blending mandates across states
Lack of organized feedstock collection systems
Price volatility of raw materials
Limited public awareness
Competition from fossil diesel, which is still subsidized in some areas

To overcome these issues, cohesive policy frameworks, efficient supply chains, consumer education, and sustainable pricing strategies are needed. Government and industry collaboration will be vital in addressing these challenges and unlocking the full potential of biodiesel.

Forecast: Biodiesel Will Be a Cornerstone of India’s Energy Transition

Renub Research’s latest analysis indicates a stable and optimistic growth trajectory for the India Biodiesel Market through 2033. With a CAGR of 7.05%, the market is set to become a vital contributor to India’s clean energy mix, supporting its net-zero emissions target by 2070.

From fueling freight transport and railways to powering rural industries and promoting waste-to-energy models, biodiesel’s versatility makes it a crucial solution in India’s sustainable development agenda.

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