Biofuels in India have gained prominence in recent years backed by increasing government support through incentives and mandates for their production and blending. Biofuels including bioethanol and biodiesel are renewable, carbon-neutral and help reduce dependency on fossil fuels. Bioethanol is majorly used for blending in gasoline as E10 and E20 blends to reduce emission levels from vehicles. Biodiesel on the other hand is used in diesel engines to replace partially or fully petro-diesel. The programs launched by Ministry of Petroleum and Natural Gas and other regulatory bodies have accelerated capacity additions for biofuels production from various feedstock in the country.

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 to 2030, as highlighted in a new report published by CoherentMI.

Market Dynamics:

The India biofuels market growth is majorly attributed to increasing government support and mandates. The Government of India has implemented various programs to boost production and consumption of biofuels such as the National Policy on Biofuels 2018 targeting an indicative blend of 20% ethanol in gasoline and 5% biodiesel in diesel by 2030. It has also mandated oil marketing companies to sell transportation fuels containing a minimum percentage of ethanol. Furthermore, the government provides financial assistance in the form of interest subvention, viability gap funding and other incentives for setting up new plants and expansion of existing units. These initiatives are encouraging investments in domestic biofuels production capacity additions, thereby fueling market growth over the forecast period. Another major growth driver is mounting concerns regarding environmental pollution and need to reduce dependence on fossil fuel imports. With stringent emission norms, demand for greener biofuels is increasing across various end-use industries like automotive and aviation.

SWOT Analysis :

Strength: India has set ambitious targets for the production and use of biofuels. The government aims to achieve 20% blending of ethanol in petrol and 5% blending of biodiesel in diesel by 2030. It is encouraging the use of surplus foodgrains and sugarcane for the production of ethanol. Indian conditions are suitable for growing feedstock like sugarcane and vegetable oils which can be used for producing biofuels.

Weakness: The biofuels industry in India is highly subsidized by the government due to high production costs and lack of economies of scale. Farmers have low productivity and constraints in transporting crops to refineries. There is also limited availability of advanced biofuel technologies in the country.

Opportunity: Growing international demand and importance given by the Indian government to reduce oil import dependence and address environmental issues provides huge opportunities. Investments are flowing in from public and private sectors to set up new biofuel plants. Alternative feedstocks like crop residues can supplement edible feedstocks and boost supplies.

Threats: Frequent changes in biofuel policies and sustainability standards create uncertainty. High food inflation is a concern due to the use of food crops for fuels. Subsidies may not continue indefinitely, raising viability questions. Competition is rising from other countries with better infrastructure and technologies.

India biofuels 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

Key Takeaways :

The India Biofuels Market Size is expected to witness high growth over the forecast period driven by supportive policies. The global 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 to 2030.

Regional Analysis: The northern states of Punjab, Haryana and Uttar Pradesh dominate ethanol production due to ample sugarcane availability. Maharashtra and Karnataka are other major producers. Going forward, Rajasthan, Gujarat and Bihar are emerging as new hubs with investments in second-generation technologies.

Key Players: Reliance Industries, Indian Oil Corporation, Bharat Petroleum, Hindustan Petroleum are leading players in ethanol blending. Tata Chemicals, Praj Industries are engaged in technology development. Cargill India, Emami Agrotech, Godrej Agrovet, Pan Bio Energy operate biomass and grain-based ethanol plants. Key players are making efforts to adopt innovative production methods and expand capacities.

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