1

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY 

USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT 

POLICY

 

Date:

GAIN Report Number:

Approved By:

Prepared By:

Report Highlights:

Total ethanol supply for ethanol blending program during current fiscal year (2011/12) is anticipated to 

be just sufficient to meet the 2-percent blending target while production of biodiesel from jatropha in 

India is commercially insignificant at present. This stands in contrast to the National Biofuel Policy, 

which aims to replace 20 percent of petroleum fuel consumption with biofuels by end of 12th Five-Year 

Plan (2016/2017).

Amit Aradhey

Allan Mustard

2012

Biofuels Annual

India

IN2081

6/20/2012

Required Report - public distribution
2

Post:

Executive Summary: 

Total ethanol supply for ethanol blending program during current fiscal year (2011/12) is anticipated to 

be just sufficient to meet the 2-percent blending target while production of biodiesel from jatropha in 

India is commercially insignificant at present. This stands in contrast to the National Biofuel Policy 

approved by the Government of India on December 24, 2009. The policy encourages use of renewable 

energy resources as alternate fuel to supplement fossil motor fuels and had proposed a target of 

replacing 20 percent of fossil motor fuel consumption with biofuels (bioethanol and biodiesel) by the 

end of the 12th Five-Year Plan (2017).

With an outlook for strong sugarcane and sugar production for the third consecutive year [1] , the Indian 

government may renew its focus and strongly implement the mandatory 5-percent ethanol content in 

petrol, provided there is a consensus among stakeholders on the purchase price of ethanol for the 

Ethanol Blending Program (EBP). The government‟s current target of a 5-percent blend of ethanol in 

gasoline has been partially successful in years of surplus sugar production and below target when sugar 

production declined. Presently, the contracted ethanol supply for current fiscal would be just sufficient 

to meet 2 percent blending. 

Production of biodiesel in India is commercially insignificant and will not soon be commercially 

deployed as a economically viable biofuel. The government‟s plan to blend diesel fuel with 20 percent 

content of biodiesel by fiscal year (April-March) 2011/12 is improbable mostly due to unavailability of 

high-yielding, drought-tolerant jatropha seeds to produce biodiesel.

However, generation of grid-quality power from biomass continues to play an important role as fuel for 

sugar and textile mills, and has significant potential in breweries, fertilizer plants, the pulp and paper 

industry, solvent extraction units, rice mills, and petrochemical plants. The total biomass power 

potential in India is estimated at 31,000 MW; of which surplus power generation through bagasse is 

10,000 MW.

[1] Marketing Year Oct-Sep 2012/13

Author Defined: 

OVERVIEW 

India is the world‟s fifth largest primary energy consumer and fourth largest petroleum consumer after 

United States, China and Japan. Despite the recent global economic slowdown, India‟s economy is 

expected to continue to grow at 6 to 8 percent per year in the near term. With an outlook for moderate 

to strong economic growth [1]: and a rising population, growing infrastructural and socio-economic 

development will stimulate an increase in energy consumption across all major sectors of the Indian 

New Delhi
3

economy.

In the recent past, starting in Indian fiscal year (IFY) 2009/10, imports of gasoline and petroleum 

products has outgrown total domestic consumption by more than 14 percent. While India‟s domestic 

energy base is substantial, the country continues to rely on imports for a considerable amount of its 

energy use [2] , consequently escalating India‟s oil import expenditure to over $135 billion in IFY 

2011/12, up 22 percent over the previous year (figure 1). Concurrently, petroleum consumption (Figure 

2) in India has also grown in tandem to 148 million tons. 

Figure 1. India: Import of Crude Oil and Value of Petroleum 

Source: Petroleum Planning and Analysis Cell, Government of India (GOI)

*: estimate

It is estimated that the proportionate consumption of petroleum products in India is as follows 

(petroleum consumption): 

Transport (Petrol, Diesel, CNG, Aviation Fuel) : 51 percent

Industry (Petrol, Diesel, Fuel Oil, Naphtha, Natural Gas): 14 percent

Commercial and Others: 13 percent

Domestic (LPG and Kerosene): 18 percent

Agriculture (Diesel): 4 percent

Thus, in terms of end usage, energy demand across the transport sector is greatest. Roads, being one of 

the dominant infrastructures for transport, carry an estimated 85 to 90 percent of the country‟s passenger 

traffic and 65 percent of its freight. Traffic on roads is growing at a rate of 7 to 10 percent per year; 

while the vehicle growth is of the order of 8 to 10 percent per year.

Easy availability, adaptability to individual needs and cost saving are some of the factors which favor 

road transport. Total registered motor vehicles in India in fiscal year 2005/06 numbered approximately 

90 million [3] and are forecast to exceed 140 million by the end of fiscal 2011/12. Economic growth, 

increasing urbanization, a rise in consumer spending levels and improved road infrastructure have 

stimulated new vehicle registrations (particularly four-wheel as opposed to two-wheel vehicles). As 

vehicle ownership expands, petroleum demand in the transport sector is expected to grow in tandem.

Diesel and gasoline account for more than 95 percent of the requirement for transportation fuel, and 

demand is expected to grow at 6 to 8 percent over the coming years.

 
4

Figure 2. India: Consumption of Petroleum Products

Source: Petroleum Planning and Analysis Cell, Government of India (GOI)

*: Estimate

 

Given that India is the fourth largest global contributor to carbon emissions, the GOI transport policy 

has targeted EURO-III and IV vehicle emission norms [4] for vehicles, which in turn would require 

adoption of clean and green fuel. The government is seriously concerned about economic, 

environmental, [5] energy security while looking to alternate fuels to meet energy demand through safe, 

clean, and convenient forms of energy at least cost in a technically efficient, economically viable and 

environmentally sustainable manner. To meet these objectives, the Union Cabinet approved the 

National Policy on Biofuels on December 24, 2009 (PIB press release). Endowed with significant 

potential for generating energy through renewable resources, the Government of India (GOI) is 

promoting production and use of i) ethanol derived from sugar molasses/juice for blending with 

gasoline and ii) biodiesel derived from inedible oils and oil waste for blending with diesel. 

POLICY AND PROGRAM: ‘INDIA’S BIOFUEL POLICY’ 

SALIENT FEATURES OF INDIA’S BIOFUEL POLICY 

National Biofuel Steering Committee (NBSC) under the Prime Minister to set policy. 

Strengthen India‟s energy security by encouraging use of renewable energy resources to 

supplement transport fuels. An indicative 20-percent target for blending of biofuel for both 

biodiesel and bioethanol. 

Meet the energy needs of India‟s vast rural population, stimulating rural development and 

creating employment opportunities. 

Address global concerns about net reduction of carbon emissions through use of environmentally 

friendly biofuels.

Derive biofuel from inedible feedstock grown on degraded soils or wastelands unsuited to food 

or feed production, thus avoiding a possible conflict of fuel- versus food security.
5

Facilitate optimal development and utilization of indigenous biomass feedstock for production of 

biofuels. The policy also envisages development of next-generation, more efficient biofuel 

conversion technologies based on new feedstock‟s. 

Minimum Support Price (MSP) mechanism to ensure a fair price for biodiesel oilseed growers.

Implementation of the proposal would be considered carefully after consultation with 

stakeholders, central and state governments, Biofuel Steering Committee, and a final decision by 

the National Biofuel Coordination Committee.

The state-owned Indian oil marketing companies propose to purchase bioethanol at a Minimum 

Purchase Price (MPP) based on the actual cost of production and import price of bioethanol. In 

the case of biodiesel, the MPP should be linked to the prevailing retail diesel price. 

If necessary, the GOI proposes to create a National Biofuel Fund for providing financial 

incentives, including subsidies and grants, for new and second-generation feedstock‟s, advanced 

technologies and conversion processes, and production units based on new and secondgeneration feedstock. 

Bring biofuels under the ambit of “Declared Goods” by the Government so as to ensure their 

unrestricted movement between states. [6]

Except for a concessional excise tax of 16 percent on bioethanol, no other central taxes and 

duties are proposed to be levied on biodiesel and bioethanol.

Biofuel technologies and projects would be allowed 100-percent foreign equity through an 

automatic approval route to attract foreign direct investment (FDI), provided the biofuel is for 

domestic use only, and not for export. Planting of inedible oil bearing plants would not be open 

to FDI participation. 

For more information, please follow the link to biofuel policy.

Institutional mechanism

The National Biofuel Policy proposes to set up a National Biofuel Coordination Committee (NBCC) 

headed by the Prime Minister. Given the roles of different agencies and ministries in the biofuel 

program, NBCC‟s role of providing high-level coordination, policy guidance and review of biofuel 

development, promotion and utilization becomes more imperative. The committee would meet 

periodically to review progress of and to monitor the biofuel program. The policy also mandates a 

Biofuel Steering Committee headed by a Cabinet Secretary to oversee implementation of its policies on 

a regular basis.

Various state governments will work closely with their respective research institutions, forestry 

department, and universities for development and promotion of biofuel programs. Few states 

(http://www.pcra-biofuels.org/whois.htm) have drafted policies and set up institutions for promoting 

biofuel in their states. In order to deal with different aspects of biofuel development and promotion in 

the country, several ministries have been allocated specific roles and responsibilities:
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Ministry of... Role

New and Renewable 

Energy Sources

Policymaking and overall coordination concerning biofuels. Undertake 

Research and Development (R&D) of various applications of biofuels

Petroleum and 

Natural Gas

Marketing biofuels as well as development and implementation of pricing 

and procurement policy

Agriculture R&D of biofuel feedstock through ICAR and IARI (sweet sorghum, 

jatropha, pongamia oil tree (Millettia pinnata), and inedible oilseeds).

Undertake jatropha plantation on non-forest land. 

Rural Development Plantation of jatropha on wastelands. Integrate biodiesel program with rural 

development schemes (such as Mahatma Gandhi National Rural 

Employment Guarantee Scheme). Coordinate R&D with other agencies.

Science and 

Technology

Support research on biofuel crops through biotechnology

Road Transport and 

Highway

Plantation along highways and use of biofuel blended fuel. Work with 

automobile manufacturers‟ association in India for engine modification, 

emission norms, etc. 

Railways Undertake plantation of jatropha on wastelands, along rail rights of way, and 

conduct trials of biodiesel blended fuel in locomotives. 

Environment and 

Forests

Ensure implementation of jatropha and tree borne oilseed plantations in 

forest wastelands; Central Pollution Control Board to monitor health and 

environmental effects. 

ETHANOL POLICY 

Ethanol is produced in India from sugarcane molasses for blending with gasoline. Beginning January 

2003, the GOI mandated a 5-percent ethanol blend in gasoline through its ambitious Ethanol Blending 

Program (EBP). Ethanol and alcohol production in India depends largely on availability of sugar 

molasses (a byproduct of sugar production). Since sugarcane production in India is cyclical, ethanol 

production also varies with sugar and sugarcane production and therefore does not assure optimum 

supply levels needed to meet the demand at any given time. Lower sugar molasses availability and 

consequent higher molasses prices affect the cost of production of ethanol, thereby disrupting the supply 

of ethanol for the blending program at pre-negotiated fixed ethanol prices. 

Developments in EBP 

Period Action Comments
7

January, 2003 Ministry of Petroleum and Natural 

Gas (MoPNG) made 5-percent 

ethanol blending (Gazette on EBP ) in 

gasoline (gasoline) mandatory across 

9 States and 5 Union Territories

Partially implemented due to 

unavailability of ethanol (due to low 

sugarcane production in 2003/04 and 

2004/05)

September, 

2006

Resurgence in sugarcane production 

in 2005/06 and 2006/07 led GOI to 

mandate 5-percent blending of 

ethanol in gasoline across 20 states 

and 4 Union Territories (excludes 

Northeast, Jammu & Kashmir and 

Andaman & Nicobar) subject to 

commercial viability

OMC contracted for 1.4 billion liters of 

ethanol for EBP at Rs 21.50/liter from 

Nov 2006 to Nov 2009. Only 540 million 

liters of ethanol supplied till April 2009 

due to short supply of sugar molasses.

GOI deferred implementation due to short 

supply of sugarcane in 2007/08

September, 

2008

Union Cabinet approved the National 

Biofuel Policy. Five-percent blending 

mandatory nationwide. 

GOI deferred the plan again due to short 

supplies of sugarcane and sugar molasses 

in 2008/09. 

October, 

2008

Third phase of implementing EBP; 

blend to be increased to 10 percent. 

Since there was no official notification 

released, oil marketing companies have 

not started 10 percent ethanol blending. 

November 

2009

Government meets to decide blending 

target for EBP

Status quo ante remains, targets 5 percent 

EBP 

August 2010 Government fixed an ad-hoc 

provisional procurement price of Rs 

27 per liter of ethanol by OMC for 

EBP program. Decision was taken to 

constitute expert committee under 

Chairmanship of Dr. Choudhary, 

Member of Planning Commission, to 

recommend a formula for pricing 

ethanol. 

Expert Committee in March 2011 had 

recommended that ethanol be priced 20 

percent lower than gasoline. No 

consensus yet on pricing policy of 

ethanol. When ethanol supply runs short, 

government proposes to reduce import 

duty on alcohol and molasses. OMC 

caveats the proposal that alcohol or 

molasses could not be imported for EBP; 

it has to be exclusively sourced from 

domestic produced molasses. 

Indian Fiscal 

Year [7]

(April-March)

2010/11

OMC unable to procure contracted

ethanol supplies from sugar mills and 

ethanol manufacturers. The Ministry 

of Petroleum and Natural Gas, GOI 

has not been able to implement 

compulsory blending of 5 percent 

ethanol in gasoline.

Most domestic ethanol producers or 

suppliers were disqualified from 

supplying ethanol.

Failure to set ethanol pricing formula and 

procedural delays by various state 

governments delayed procurement for 

EBP.

Industry sources estimate that 365 million 

liters of ethanol was supplied against the 

contracted 570 million liters. 
8

During same period, a major share of 

molasses production was diverted as cattle 

feed to Europe. 

Fiscal Year 

2011/12

OMC targets procurement of 1 billion 

liters of ethanol for fiscal 2011/12. 

After deducting the ethanol requirement 

for EBP in non-implementing states (such 

as Tamil- Nadu, West Bengal, Odisha, 

Jharkhand, Chhattisgarh and Madhya 

Pradesh), the present requirement worked 

out to 720 million liters, of which 

suppliers had offered to supply 610 

million liters. With lower supplies in a 

few states, the contracted supply was 

further drawn down to 430 million liters. 

Molasses continues to be exported as 

cattle feed to Europe. 

Current 

Status

By 2017, the GOI mandates replacing 

20 percent of petroleum-based motor 

fuel with biofuels. 

Given the surplus sugar situation in the 

current and forecast years (2012/13), net 

ethanol availability after accounting for 

domestic consumption seems sufficient to 

meet blending targets (5 & 10 percent) for 

EBP. The contracted supply for current 

fiscal year is just sufficient to meet 2 

percent blending target. However, given 

the constraints, achieving a higher target 

(20 percent) looks unattainable. 

Expanding the ethanol supply: 

Currently, the government does not allow use of imported ethanol for the EBP program, as the focus is 

on developing domestic capacity.

Presently, ethanol is manufactured directly from sugar molasses, but given the projection for 

higher sugarcane production in India for 2011/12 and 2012/13 [8] (upswing in production cycle), 

use of sugarcane juice (on an experimental basis) for ethanol production seems to be a viable 

option especially under conditions of a sugarcane glut.

The GOI is offering subsidized loans (through sugarcane development funds) to sugar mills for

setting up of an ethanol production unit. The loans would cover up to a maximum of 40 percent 

of the project cost. 

Given the limited scope for bringing additional area under water-intensive sugarcane cultivation, 

fluctuations in supply and pricing of ethanol could be stabilized through use of alternate crops.

Public and private institutions could promote use of alternate crops such as sweet sorghum, 

sugar beets, and sweet potatoes to supplement domestic ethanol production, though the efforts to 
9

produce ethanol from these feed stocks are at an experimental stage.

Development of low-cost technology to utilize lignocellulosic material such as agricultural and 

forest residues to produce bioethanol.

Impediments 

Procedural hurdles such as non-issuance of export permits for interstate transport of ethanol, delays in 

issuing no-objection-certificates (NOC), higher taxes and levies across different states have impacted 

the EBP. Rules and regulations, including a high excise tax of Rs 750 per ton on molasses, which 

works out to 25- to 30 percent ad valorem, whereas on industrial alcohol the central excise duty is 12.36 

percent ad valorem, and interstate (octroi) taxes applicable to potable alcohol for industrial use are 

equally applicable to ethanol for blending with gasoline, thereby severely constraining its availability 

and utilization for EBP.

BIO-DIESEL POLICY

The GOI had launched the National Bio-diesel Mission (NBM) after identifying jatropha (Jatropha 

curcas) as the most suitable tree-borne oilseed for biodiesel production. The Planning Commission of 

India set an ambitious target of planting 11.2 to 13.4 million hectares of land to jatropha by the end of 

the 11th Five Year Plan (2011/12). The central government and several state governments provide fiscal 

incentives in support of planting jatropha and other inedible oilseeds. Several public institutions, 

government departments, state biofuel boards, state agricultural universities and cooperative sectors are 

also supporting the biofuel mission in various capacities. 

Developments in NBM 

Period Action Comments

April, 

2003

Demonstration phase 2003 to 2007: Ministry 

of Rural Development appointed as nodal 

ministry to plant 400,000 hectares to jatropha.

This phase also proposed nursery 

development, establishment of seed 

procurement and establishment centers, 

installation of trans-esterification plant, 

blending and marketing of biodiesel 

Public and private sectors, state 

governments, research institutions 

(Indian and foreign) involved in the 

program achieved varying degrees of 

success. 
10

October, 

2005

Ministry of Petroleum and Natural Gas 

(MoPNG) announced biodiesel purchase 

policy under which oil marketing companies 

(OMC) would purchase biodiesel from 20 

procurement centers across the country to 

blend with high speed diesel as of January 

2006. Purchase price set at Rs 26.5 per liter 

Cost of biodiesel production higher 

(20 to 50 percent) than purchase 

price. No sale of biodiesel.

2008 Self Sustaining Execution phase 2008 to 

2012: Targeted to produce sufficient biodiesel 

for 20 percent blending by end of 11th (2008-

12) five-year plan 

Lack of large-scale plantation, use of 

conventional low-yielding jatropha 

cultivars, seed collection and 

extraction infrastructure, buy-back 

arrangement, inadequate capacity- and 

confidence-building measures among 

farmers impeded the progress of this 

phase.

2010 An estimated half-million hectares has been 

planted to jatropha, of which two thirds is 

believed to be new plantations needing two to 

three years to mature 

Assuming 80 percent of the biodiesel 

requirement is met though jatropha 

oilseeds, the biodiesel thus obtained 

will meet just 0.01 percent of total 

biodiesel required for 5-percent 

blending by 2010/11. 

Fiscal 

Year 

2011/12

No additional „wastelands‟ have been brought 

under jatropha cultivation

The government may have to offer 

fiscal incentives [9] to growers to 

adopt better agronomic practices 

during first 2-3 years of plantation 

development in addition to marketing 

and price support mechanisms to 

encourage biodiesel program.

Status quo remains as the production 

of biodiesel from jatropha seeds is 

commercially insignificant at present.

The GOI‟s ambitious plan of producing sufficient biodiesel by fiscal 2011/12 to meet its mandate of 20-

percent blending with diesel is looking unattainable given the unavailability of sufficient feedstock 

(jatropha seeds) and lack of sufficient research and development to evolve high-yielding, droughttolerant jatropha seeds.

According to one estimate, 3.21 million tons of biodiesel would be required from 3.42 million hectares 

to meet 5-percent blending by Fiscal 2011/12 [10]. Considering jatropha to be a major feedstock for 

biodiesel with an average seed yield of 2.5 tons/hectare and 30 percent biodiesel recovery rate, 18.6 

million hectares would need be brought under jatropha cultivation to meet the 20-percent blending 

target by 2017. The above assessment assumes a steady rise in demand (circa 6.4 percent/annum) for 

diesel in India. Diesel demand during the 12th Five-year plan (fiscal year 2012/13 through 2016/17) is 

likely to grow by 35 percent to 87.4 million tons [11]. Meeting a 5-percent blending target will require 

an additional 4.1 million hectares under jatropha.
11

Impediments

Smaller land holdings, ownership issues with government- or community-owned wastelands, very little 

progress made by state governments to stimulate large scale jatropha plantations, and negligible 

commercial production of biodiesel have impeded efforts and investments by both private- and publicsector companies.

In the face of reports that most biodiesel companies in India are working at very low capacity and some 

are idle, the GOI has reportedly contemplated fixing a higher price of Rs 34 per liter (compared to Rs 

26.5 /liter) for purchase of biodiesel (please refer our previous GAIN report IN1058 for more 

information) through oil marketing companies (OMC), though industry and stakeholders had 

recommended an even higher price (Rs 36 per liter) to bring idle companies back to operation. The 

proposed price is believed to have been mutually agreed by the GOI and industry representatives.

However, this proposal has yet to materialize. 

ETHANOL AND BIODIESEL

Ethanol 

India has 330 distilleries which can produce over 4 billion liters of rectified spirit (alcohol) per year in 

addition to 1.5 billion liters of fuel ethanol. Of this total, about 140 have the capacity to distill around 2 

billion liters [12] of conventional ethanol per year and could meet the demand for 5-percent blending 

with gasoline. Currently, India produces conventional bioethanol from sugar molasses; production of 

advanced bioethanol is in a nascent phase (research and development). 

Table 1. India: Conventional Bioethanol Production and Distribution (million liters) 

Calendar Year 2006 2007 2008 2009 2010 2011 2012 2013

Beginning Stocks 483 747 1,396 1,672 1,241 1,065 756 911

Production 1,898 2,398 2,150 1,073 1,522 1,681 2,170 2,239

Imports 29 15 70 280 92 20 80 50

Total Supply 2,410 3,160 3,616 3,025 2,855 2,766 2,901 2,995

Exports 24 14 3 4 10 15 10 15

Consumption 

Industrial Use 

619

650 700 700 720 700 720 740

Potable Liquor 

745

800 850 880 900 850 880 910
12

Blended Gasoline 

200

200 280 100 50 365 400 450

Other Use 75 100 110 100 110 80 85 85

Total Consumption 1639 1750 1940 1780 1780 1995 2085 2135

Ending Stocks 747 1,396 1,673 1,241 1,065 756

 911

1,000

Total Distribution 2,410 3,160 3,616 3,025 2,855 2,766 3,006 3,200

Production Capacity (Conventional Fuel)

No. of Biorefineries 

[13]

115 115 115 115 115 115 140 140

Capacity 

(billion liters‟)

 1.5 1.5 1.5 1.5 1.5 1.5 2 2

Feedstock Use (1,000 MT)

Feedstock A (000‟ 

tons)

7,910 9,992 8,958 4,469 6,342 7,004 9,041 9,330

Source: FAS/New Delhi Estimates based on information from trade sources

Note: Feedstock A is molasses

Production:

With an outlook for strong sugar production for a third consecutive year (viz., 2012/13, Marketing Year 

(MY) October-September), domestic ethanol production is likely to grow in tandem, almost reaching 

the high it last achieved in calendar year 2007. The Indian government may renew its focus and 

strongly implement the mandatory 5-percent ethanol blending in petrol, provided there is consensus 

among stakeholders on the purchase price of ethanol for EBP. Presently, only three-fifths of total 

facilities are actually supplying ethanol, severely constraining the supply of ethanol for EBP.

Consequently, molasses stocks are being diverted to Europe for cattle feed. Short supplies of sugar 

molasses in preceding years (before MY 2010/11) had constrained ethanol production and consequent 

higher prices made it unviable to supply ethanol to petroleum companies at the negotiated prices.

Presently, strong demand for bagasse (from paper mills, independent sugar units) and molasses (for 

cattle feed and potable alcohol production) continues to support profitability of sugar mills at times 

when profit margins run thin.

Consumption:

Improved supplies of molasses and a steady rise in demand from the chemical and potable liquor 

industries in the face of an expected rise in blending for EBP could raise total ethanol consumption in 

2013 to 2.1 billion liters.

Trade:

Exports of ethanol [14] have grown significantly in the last three years. Taking advantage of the upswing 

in the sugarcane production cycle, India has exported 25.2 million liters [15] of denatured ethanol and 

spirits worth $21 million [16] to Ghana, South Korea, Saudi Arabia, Sierra Leone, Cameroon, Tanzania, 

Liberia and host of other African and neighboring countries [17] . Besides being a net exporter of 

ethanol, India had also imported approximately 16 million liters of ethanol and spirits mostly from 
13

United States, UAE, Pakistan, UK, South Africa, Germany and China. Traditionally, India imports 

ethanol only to meet shortfalls during years of low sugar production. Demand is mostly for 

consumption across the potable liquor and chemical industries, not for fuel. There are no quantitative 

restrictions on import of biofuels; however, high duties (Table 2) sometimes make imports 

economically unviable. The GOI does not provide any financial assistance for exports of biofuels 

(biodiesel or ethanol). However, current trade regulations allow duty-free imports of feedstocks for reexport by certified export oriented units.

Table 2. India: Import duty on biofuels (percent ad valorem on CIF value)

ITC HS Tariff Number Import duty (percent)

2207.20 Denatured Ethyl Alcohol and Spirits (including ethanol) 28.64

3824.90 Chemical Products NES (including biodiesel) 28.64

Ending Stocks:

The ending stocks for the forecast year (2013) are likely to recover to 1 billion liters, up 90 million liters 

over the current year‟s estimate.

Biodiesel 

Jatropha plantation is a subject for state governments. Public-sector petroleum companies and privatesector firms have entered into memoranda of understanding with state governments to establish and 

promote jatropha plantation on government wastelands or to contract with small and medium farmers.

However, only a few states have been able to promote actively jatropha plantation despite the 

government‟s incentives and encouraging policies.

Slow progress in jatropha planting has resulted in lower availability of jatropha seeds to be used as 

feedstock for biodiesel production and hence most of the biodiesel units are not operational most of the 

year. There are about 20 large-capacity biodiesel plants (10,000 to 200,000 metric tons per year) in 

India that produce biodiesel from alternative feed stocks such as edible oil waste (unusable oil 

fractions), animal fat and inedible oils.

Presently, commercial production and marketing of jatropha-based biodiesel in India is small, with 

estimates varying from 140 to 300 million liters per year. The biodiesel produced is sold to the 

unorganized sector (irrigation pumps, mobile towers, kilns, agricultural usage, owners of diesel 

generators, etc.) and to experimental projects carried out by automobile manufacturers and transport 

companies. However, as per industry sources, there has been no commercial sale of biodiesel to stateowned transport companies except for trials [18]

. 

Additionally, there has been no commercial sale of biodiesel across the biodiesel purchase centers (set 

up by the GOI) as the government biodiesel purchase price of Rs 26.5 (48 cents) per liter is still below 

the estimated biodiesel finished production cost (Rs 35 to Rs 40 per liter / 63-72 cents per liter [19] ).

Unavailability of feedstock supply (jatropha seeds), rising wage rates and inefficient marketing channels 

are a few of the major factors that have contributed to higher production costs [20].
14

In order to revive and accelerate the biodiesel industry, a recent study taken up by the industry 

recommends that the present procurement prices of biodiesel be raised as well as to ensure an average 

procurement price of jatropha seeds at level such that farmers will not shift land from food crops to fuel 

crops.

Advanced Biofuels

Research and development activities (experimental or pilot trials by select industry groups and 

government research institutes) are being carried out to develop suitable technologies for production of 

advanced biofuels from wood biomass, agricultural and forest waste, municipal solid waste conversion, 

microalgae and photosynthetic organisms. Given the technological challenges, commercial production 

of advanced biofuel is still far in the future. 

BIOMASS FOR HEAT AND POWER 

Scope

The Ministry of New and Renewable Energy is implementing a biomass power program with the 

objective of generating grid-quality power from biomass resources through various conversion 

technologies along with optimizing power generation from bagasse produced in sugar mills. The 

benefits include its renewable nature, wide adaptability, carbon neutrality and the potential to provide 

largescale productive employment in rural areas. Biomass has been playing important role as fuel for 

sugar mills, pulp and paper mills, small and medium enterprises (SME). In particular; there is 

significant potential in breweries, textile mills, fertilizer plants, solvent extraction units, rice mills, and 

petrochemical plants.

Biomass 

Biomass materials used for power generation include bagasse, rice husk, straw, cotton stalks, coconut 

shells, soy husk, oilseed cakes, coffee waste, jute wastes, peanut shells, and sawdust [21] . However, 

competition for biomass from the growing cattle and water buffalo sector may limit supplies unless 

biomass is grown specifically for power generation. The availability of crop residue from non-fodder 

crops may prove to be good alternatives for biomass power production [22].

Availability

The availability of biomass in India is estimated at about 500 million tons per year including residues 

from agriculture, agricultural industries, and forest products. A survey by the Ministry of New and 

Renewable Energy indicated that 15-20 percent of total crop residues could be used for power

generation, without altering their present uses. This implies availability of 120 to 150 million tons of 

surplus agro-industrial and agricultural residues per year that could be made available for power 

generation. Around 1525 MW of power is proposed to be harnessed from agricultural residues and 

plantations by end of 12th Five-Year Plan (Table 3). 
15

Bagasse power cogeneration

With modernization of new and existing sugar mills the surplus power generation through bagasse 

cogeneration in India‟s 550 sugar mills is estimated at 10,000 MW (the target for 12th Five-year plan is 

to achieve 32 percent of total potential) if these mills were to adopt technically and economically 

optimal levels of cogeneration for extracting power from bagasse. Total estimated biomass power 

potential from bagasse (biomass power) is about 31,000 MW. The GOI has initiated several programs 

and schemes for promoting renewable energy sources, the details of which may be accessed from 

www.mnre.gov.in. 

Table 3. India: Biomass based Commercial Energy Achievement in Mega Watts (MW)

S.No. Sources/

Systems

Estimated 

Potential 

Achieved in 

fiscal 2010-

11

Achieved

through 

March 

2011 

Achieved

through 

December 

2011 

Total Target by 

end of 12th Fiveyear plan 

(2016/17) 

1 Biomass Power 

(Agri-residues 

and plantations)

18,000 143.50 1,025 1,118 1,525 

2 Biomass Power 

Cogeneration

(Non-bagasse)

NA 61.19 282.07 NA NA

3 Biomass Power 

Cogeneration 

(Bagasse)

10,000 # 257 1616 2,012 * 3,216 

4 Waste to Energy 2,700 7.50 72.46 NA 324 

5 Biomass Gasifier - 6.72 eq 150 eq NA NA

6 Family Type 

Biogas Plants

12 Million 73,281 units 4.5 million 

units

NA 5.6 million units

Source: Ministry of New and Renewable Energy, GOI 

Notes: 

NA: Not Available

MW: Megawatts

MW eq: Megawatt equivalent

*: Includes 1932 MW from private-sector sugar mills while additional capacity from cooperative sector 

likely to be commissioned by August 2012

#: updated from Indian Sugar Mills Association (ISMA)

[1] Economic Survey of India pegs growth at 7.6 percent for fiscal 2012/13 and 8.6 percent for fiscal 2013/14, while other private 

institutions and rating agencies expect Indian economic growth to moderate down to 6.5/7 percent and 7.5 percent in Indian fiscal 2012/13 

and 2013/14 respectively. 

[2] According to the International Energy Agency (IEA), hydrocarbons account for the majority of India's energy use. Together, coal and 

oil represent about two-thirds of total energy use. Natural gas now accounts for a seven-percent share, which is expected to grow with the 

discovery of new gas deposits. Combustible renewable resources and waste constitute about one fourth of Indian energy use. This share 

includes traditional biomass sources such as firewood and cow-dung, which are used by more than 800 million Indian households for 

cooking. Other renewable such as wind, geothermal, solar, and hydroelectricity represent a 2-percent share of the Indian fuel mix.

Nuclear holds a one percent share.

[3] Ministry of Road Transport and Highways, GOI

[4] http://morth.nic.in/index2.asp?slid=58&sublinkid=29&lang=1

[5] Preliminary estimate for 2010 indicates that India outpaced EU-27 and stands third after China and U.S. on CO2 emission estimates 
16

(India‟s carbon emissions are growing 3.2 percent annually) 

[6] In contrast to the United States, India does not enjoy free interstate movement of goods and services.

[7] Hereinafter referred to as „f'iscal year‟ unless otherwise stated

[8] Marketing Year (MY) (October-September)

[9] Coupled with carbon credits 

[10] A policy brief paper from the National Centre for Agricultural Economics and Policy Research (NCAP)

[11] Diesel demand in 2011-12 was estimated at 65.2 million tons (77.7 billion liters).

[12] Includes an additional annual ethanol production capacity of 400 million liters that was built up in the last four years after the Indian 

government provided funds to sugar mills

[13] An estimated three-fifths of total refineries are actually supplying ethanol for EBP.

[14] Export of biofuel is only permitted after supply meets the domestic requirement and the final decision is taken by the National Biofuel 

Coordination Committee.

[15] Global Trade Atlas

[16] First 10 months of calendar year 2011

[17] During the same period, India also exported 132,068 metric tons of chemical products including biodiesel worth $108 million to Sri 

Lanka, United States, Italy, Bangladesh and other Asian and European countries.

[18] A few state road transport corporations claim to run their buses on blended fuels 

[19] Cost of production may be still higher, as above estimates are based on inputs from industry sources

[20] Feedstock constitutes more than 75 percent of cost of production of biodiesel

[21] Annual report 2011/12, MNRE, GOI

[22] Department of Science and Technology, GOI