Exciting Opportunity: Indian Oil Marketing Companies Unveil New Biodiesel Tender for FY 2025-26

India is making strides in its biodiesel sector. The state-owned Oil Marketing Companies (OMCs) are seeking around 200 million liters of biodiesel for the first quarter of the financial year starting in April 2025. This fresh tender was announced by Indian Oil Corporation Limited (IOCL), Bharat Petroleum Corporation Limited (BPCL), and Hindustan Petroleum Corporation Limited (HPCL).

This push for biodiesel aligns with India’s goal of blending 5% biodiesel by 2030, part of the National Policy on Biofuels. The urgency of this initiative is heightened by penalties set to take effect in April 2025 for selling unblended diesel. Despite challenges, this commitment reflects the government’s dedication to biofuels.

The journey of India’s biodiesel program has been mixed since it began in 2005. While the amount of biodiesel purchased has significantly increased—from 1.19 crore liters in 2015-16 to 6.05 crore liters in 2022-23—a successful blending rate has been elusive. Right now, the blending levels are around 0.5% to 0.6% for FY 2024-25, presenting a clear gap from the set targets.

Initial challenges included poor results from Jatropha cultivation, which struggled with low yields. Over time, the policy evolved to accept alternative feedstocks like Used Cooking Oil (UCO) and animal tallow, showing a more flexible approach based on real-world experiences.

Comparing biodiesel and ethanol in India reveals interesting contrasts. Ethanol blending has soared to over 16% as of December 2024, approaching its goal of 20% by 2025-26. Experts believe this success stems from several key factors. “Ethanol has an easier path due to a stable sugarcane supply,” says Dr. Rajeev Kumar, an energy policy expert. "Biodiesel has grappled with securing feedstock and making it economically viable."

The biodiesel program’s targets have continuously shifted. Initially, the goal was a 20% substitution of diesel with biofuels by 2030, later adjusted to 5% in 2018. Currently, projections suggest intermediate aims of 1% by 2026 and 2.5% by 2028.

Various barriers contribute to this gap between ambitions and reality. These include a lack of consistent feedstock supplies, underdeveloped supply chain infrastructure, higher production costs than traditional diesel, and limited financial support for producers.

Recent statistics reveal that India’s biodiesel consumption still falls short of its potential, even as the global demand for sustainable fuels rises. The challenge remains to align the biodiesel sector with the successes seen in ethanol, which may require more robust policy interventions, better supply networks, and greater incentives for producers.

For further insights into India’s evolving energy landscape, including policy trends and market shifts, check out publications from The Energy and Resources Institute (TERI).

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