Market Intelligence
Renewable Fuels Environmental Technology India Trade Opportunities Export Promotion

India Biofuels Sector

India’s fast-growing biofuels sector offers robust opportunities for U.S. companies with expertise in advanced technologies, sustainable fuels, and energy infrastructure. With ambitious national targets, strong policy support, and a push for international collaboration, India is rapidly positioning itself as a global leader in biofuel innovation and implementation. U.S. firms specializing in second-generation ethanol, sustainable aviation fuel (SAF), and waste-to-energy solutions will find a receptive market eager for foreign partnership and investment.

India’s biofuels sector is undergoing rapid transformation, driven by strong government policies, increasing energy demand, and the country’s commitment to reducing carbon emissions. With a focus on ethanol, biodiesel, compressed biogas (CBG), and advanced biofuels, the sector plays a vital role in diversifying India’s energy portfolio to enhance its energy security strategy.

The Government of India has been actively promoting biofuels to improve farmer incomes by utilizing agricultural waste and surplus crops for biofuel production. India’s National Policy on Biofuels 2018 is a major driver for biofuels, setting clear targets and financial incentives to develop the sector. A key initiative under this policy is India’s Ethanol Blending Program, which aims to achieve 20% ethanol blending by the end of 2025. As of January 13, India had already achieved an 18% blend rate—a major milestone supported by incentives and soft loans for sugar mills and grain-based distilleries.

India is positioning itself as a global leader in biofuels through the Global Biofuel Alliance, launched during the G20 Summit in 2023. This initiative seeks to enhance international collaboration in research, technology exchange, and policy harmonization to accelerate biofuel adoption worldwide. Furthermore, the government’s Pradhan Mantri JI-VAN Yojana program provides financial assistance to bio-refineries to increase the production of second-generation (2G) ethanol derived from agricultural waste and non-food biomass. The Sustainable Alternative Towards Affordable Transportation program promotes CBG production, encouraging private-sector participation to set up plants that utilize organic waste, including municipal solid waste and agricultural residue. 

India is also focused on Sustainable Aviation Fuel (SAF), with policy discussions and pilot projects aimed at developing domestic production capabilities. India has the potential to become a key player in the global SAF market, with the government aiming for 1% SAF blending in jet fuel by 2027 and 2% by 2028, and the potential to reach 5% by 2030.   With concerted efforts in technology development, investment, and regulatory support, India has a promising outlook for contributing to global SAF adoption.

Sector Challenges and Investment Opportunities

While the sector benefits from strong policy support, it faces several hurdles, including:

  • Limited feedstock availability high production costs, and slow technological adaptation
  • Concerns over water-intensive crops and fluctuating sugar prices
  • Restrictions on ethanol imports for fuel blending (imported ethanol may only be used for industrial purposes)
  • The need for greater investment in research and infrastructure for the adoption of advanced biofuel technologies, such as cellulosic ethanol and algal biofuels

However, these challenges also present significant business opportunities, particularly in technology partnership and infrastructure development. U.S. firms specializing in advanced enzyme technology, feedstock optimization, bio-refinery engineering, and waste-to-energy solutions will see keen interest in their solutions from the Indian counterparts. Additionally, the Indian government is actively seeking foreign partnerships to develop second-generation with converted 2G bioethanol plants, SAF production units, and biogas infrastructure. The increasing focus on SAF provides an entry point for U.S. firms with expertise in bio-based jet fuel technologies.

For entry into the Indian market, U.S. companies should identify quality partners who know the business landscape well. Strategic planning, due diligence, and consistent follow-ups are the prerequisites for success in India. The U.S. Commercial Service in India offers customized solutions to help U.S. businesses in the Indian market.

For more information regarding upcoming events and opportunities in this sector, U.S. firms can reach out to their local U.S. office or contact the U.S. Commercial Service India Energy team.