The India biofuels market is estimated to be valued at US$ 2.56 Bn in 2023 and is expected to exhibit a CAGR of 22% over the forecast period 2023-2030, as highlighted in a new report published by Coherent Market Insights. Growing consciousness about the downsides of using traditional fuels and environmental benefits of biofuels is expected to fuel the growth of the India biofuels market.
Key Market Takeaways
:The India biofuels market is anticipated to witness a CAGR of 22% during the forecast period 2023-2030, owing to strong government support policies and targets for ethanol blending.
- The Government of India updated its National Policy on Biofuels in 2022 to forward the 20% volume blending target for ethanol to 2025-2026. This translates into increasing financial support and government grants for upgrading the current biofuel facilities and constructing new ones, helping growth prospects for players in the India biofuels market.
- On the basis of feedstock, ethanol segment is expected to hold a dominant position, accounting for over 65% market share in 2030, owing to its wide usage in blending with gasoline. According to a report published by the U.S. Department of Agriculture, India is expected to face an impending feedstock shortage. In 2024, the projections highlighted an 11.5% drop in ethanol blending rate. The report also highlights India’s aim for 2030 to begin on-road use of 5% biodiesel bled, which will heavily support growth of the India biofuels market.
- On the basis of application, fuel segment dominated the market and is expected to continue its dominance with a market share of around 80% by 2030 due to the blending mandates. According to a 2024 report, India’s ethanol consumption is projected to increase up to 7.1 billion liters, out of which 6.2 billion liters would be utilized for fuel-related applications. The Indian government is implementing measures to boost maize/corn production in India for fuel ethanol by providing a Minimum Support Price (MSP) for procurement. This will further support the trend of growing demand for fuel in the Indian biofuels market.
- On the basis of technology, first generation technology segment is expected to hold the largest market share during the forecast period due to its low costs and established production processes. However, second generation technologies are expected to witness higher growth.
- On the basis of region, southern states such as Karnataka, Andhra Pradesh, and Tamil Nadu are expected to hold the dominant position with a combined share of over 40% by 2030, owing to strong sugarcane cultivation.
India Biofuels Market Report Coverage
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Report Coverage
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Details
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Market Revenue in 2023
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USD 2.56 Billion
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Estimated Value by 2030
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USD 10.31 Billion
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Growth Rate
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Poised to grow at a CAGR of 22%
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Historical Data
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2018–2022
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Forecast Period
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2023–2030
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Forecast Units
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Value (USD Million/Billion)
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Report Coverage
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Revenue Forecast, Competitive Landscape, Growth Factors, and Trends
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Segments Covered
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By Feedstock, By Application, By Technology
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Geographies Covered
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India
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Growth Drivers
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• Favorable Government Policies and Initiatives
• Growing Focus on Reducing Crude Oil Imports |
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Restraints & Challenges
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• High Production Costs
• Infrastructure Bottlenecks |
Market Dynamics
:The growth of the India biofuels market is majorly attributed to the increasing environmental concerns regarding greenhouse gas emissions from fossil fuels and growing awareness about sustainable fuels among consumers.
Government’s support through various policies and initiatives to promote biofuels is another key factor augmenting the market growth. For instance, the Government of India has set an ambitious target of achieving 20% ethanol blending in petrol and d 5 blending of biodiesel in diesel by 2030 under its Ethanol Blended Petrol (EBP) Programme. This is expected to boost demand for biofuels in India in the coming years.
Market Trends
:- With growing emphasis on sustainability, industry players are investing in research and development of advanced technologies for cost-effective production of biofuels from various feedstocks. Adoption of technologies like enzymatic hydrolysis is helping lower production costs.
- To cater to the increasing demand, both public and private players are undertaking various infrastructure development projects. These activities span across the value chain from feedstock cultivation and logistics to processing, distribution and marketing of biofuels. For example, projects are being initiated to set up separate pipelines and storage facilities for biofuels.
Region-specific Insights:
South India
: South India leads in biofuel adoption, driven by proactive government policies and strong agricultural output, especially in Karnataka, Tamil Nadu, and Andhra Pradesh. The region emphasizes ethanol and biodiesel from sugarcane and non-edible oil seeds. Investments in bio-refineries and public-private partnerships are accelerating growth, aligning with sustainability goals.Central India
: Madhya Pradesh and Chhattisgarh dominate Central India's biofuel sector, leveraging vast forest resources and agricultural residues. The region focuses on second-generation biofuels, with government-backed initiatives promoting ethanol blending and biomass gasification. Growing interest from private players and state subsidies are enhancing production capacities, supporting rural economies.East India
: East India, particularly Bihar, Odisha, and West Bengal, is emerging as a biofuel hub, utilizing rice husk and jute waste for ethanol and biodiesel. Government incentives and collaborations with local industries are fostering growth. However, logistical challenges and infrastructural gaps pose barriers, though increasing investments aim to bridge these.West India
: Maharashtra and Gujarat lead Western India’s biofuel market, fueled by robust sugarcane cultivation and industrial infrastructure. Ethanol blending programs are well-established, with significant investments in advanced bio-refineries. Policy support, especially under national bioenergy missions, and collaborations with technology providers are catalyzing the region's biofuel growth.Market Opportunities
:- The Indian government has implemented an ambitious target of 20% ethanol blending with gasoline by 2025 in order to reduce dependence on crude oil imports and curb pollution. This target, along with a rising focus on environment sustainability, presents a major market opportunity for biofuel producers in India.
- The Indian government has announced several incentives and programs to encourage private sector investments in second generation technologies. Successful commercialization of these technologies can significantly expand India's biofuel production capacity in the long run.
Competitor Insights
Key players in the India biofuels market include:
- Reliance Industries
- Indian Oil Corporation
- Bharat Petroleum
- Hindustan Petroleum
- Tata Chemicals
- Praj Industries
- Cargill India
- Emami Agrotech
- Godrej Agrovet
- Pan Bio Energy
Recent Developments
:- In October 2024, Host Country Agreement was signed by India with the Global Biofuels Alliance (GBA). The agreement was signed to facilitate the setting up of GBA’s Secretariat in the country in order to achieve goals such as boosting investments in biofuel production, defining technical standards for biofuels, and addressing challenges related to feedstock availability, among others.
- In August 2024, Maharatna Petroleum PSU Bharat Petroleum Corporation Limited (BPCL) made an announcement at Mumbai Port about introducing India's first biofuel blend, High Flash High-Speed Diesel (HFHSD) bunker. With this move, BPCL aims to take a step forward towards decarbonizing the shipping sector by supplying green energy solutions.
- In June 2024, the National Sugar Institute, Kanpur (NSI Kanpur) in collaboration with the Indian Institute of Technology Kanpur (IITK) announced plans to create a Centre of Excellence for Biofuels. By signing a Memorandum of Understanding (MoU), both NSI and IITK will be focusing on Methanol, Ethanol, Green Hydrogen, Bio-CNG, Aviation Fuel, etc. and enable India to take a leading position in the world of biofuels.
- Effective April 1, 2023, the Ministry of Petroleum & Natural Gas authorized Oil Marketing Companies to market petrol containing up to 20% ethanol (E20). Following this decision, the Hon’ble Prime Minister of India officially launched E20 on February 6, 2023.
Market Segmentation:
By Feedstock
- Ethanol
- Biodiesel
- Biogas
- Others (PVO, SVO, Biobutanol, etc.)
By Application
- Fuel
- Power Generation
- Others (chemicals, solvents, etc.)
By Technology
- First Generation
- Second Generation
- Third Generation