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India is making strides in the biofuels sector, yet shortages of suitable feedstocks are poised to constrain the expansion of its biodiesel blending programme, according to a recent report from the U.S. Department of Agriculture (USDA).
The USDA’s Foreign Agricultural Service, in its 'India – Biofuels Annual report' published on July 23, indicated that biodiesel blending in India is projected to remain below 1% in 2026. This figure falls significantly short of the government’s ambitious 5% target set for 2030.
Feedstock availability emerges as the most substantial impediment to increased biodiesel production, the report stated. India’s biodiesel industry currently relies on a diverse range of raw materials, including animal fats, non-edible oils, used cooking oil (UCO), imported palm oil, and palm stearin.
Despite UCO consumption reaching unprecedented levels, its collection continues to be challenging due to logistical hurdles. Furthermore, its availability is expected to show only marginal growth as domestic edible oil production is forecast to decline in 2026.
Edible oil imports are also anticipated to decrease amidst geopolitical instability in West Asia, which will further restrict the availability of potential biodiesel feedstocks.
Nevertheless, despite these ongoing constraints, India’s biodiesel production is forecast to climb by 15% to 640 million litres in 2026, up from a revised 556 million litres in 2025. Consumption is also projected to increase by approximately 18% to 560 million litres from 475 million litres over the same period.
With an installed biodiesel production capacity of around 2 billion litres, India is currently utilising only about one-third of this potential, primarily due to feedstock scarcities. The use of palm stearin is also projected to rise in 2026, though it remains below historical levels owing to reduced Indonesian exports.
Biodiesel imports stayed negligible in 2025 and are expected to remain low this year. Conversely, exports are forecast to increase to 110 million litres in 2026 from 76 million litres in 2025, driven by higher demand from the European Union as it seeks to offset reduced imports from Argentina.
India is also progressing with sustainable aviation fuel (SAF) initiatives, introducing mandatory blending targets for international flights at 1% from 2027, escalating to 5% by 2030.
Indian Oil Corporation secured India’s first international certification for SAF in December 2025 and currently possesses a production capacity of 30,000 tonnes annually, according to the USDA report.
India’s substantial edible oil market provides a distinct advantage for producing hydrotreated esters and fatty acids (HEFA)-based SAF from UCO. However, the efficient collection of used cooking oil from industrial facilities and households persists as a significant challenge for the sector.
The report additionally highlighted advancements in sustainable maritime fuels, noting that a major Indian port has achieved a standard capable of supporting the availability of approximately 500,000 tonnes of methanol by 2028-29.
The USDA concluded that these developments, alongside India’s broader progress in renewable energy, are strategically positioning the country as a regional leader in transportation fuel innovation.
Source: BioEnergy Times