Biodiesel is a renewable alternative fuel that can be used in place of or blended with conventional diesel fuel. It is made from vegetable oils, animal fats, or recycled cooking grease through a process called transesterification. During this process, the oil or fat is chemically reacted with an alcohol, such as methanol, and a catalyst, such as sodium hydroxide, to produce biodiesel and glycerin.

Biodiesel has several advantages over conventional diesel fuel. It is biodegradable, non-toxic, and produces fewer greenhouse gas emissions, making it a more environmentally friendly option. It is also a domestically produced fuel, reducing dependence on foreign oil. Additionally, it can be used in existing diesel engines without the need for major modifications.

However, there are multiple issues faced by the biodiesel manufacturers.

As we all know, the Government initiated biofuel promotion considering benefits of biofuels in reducing imports depending on crude, clean environment and generating additional income opportunities. There were several unexpected circumstances that impeded the production and sale of Biodiesel in past few years which is demotivating MSMEs. The following reasons are :-

Lengthy OMC Tender process –

  •  There is a big gap between Tender issuance and Product supply around 2-3 months without continuation of previous tender supply, which makes it difficult to plan on production due to fluctuating raw/final material rates.
  •    Manufacturer has to sit ideal 2-3 months during this tender process
  •   All New and Old participants have to follow same tender process (Registration, joint sampling, technical bid, price bid, LOI, Work order etc)

Other Reasons –

  •  Tender rates for final products are very low as compared to raw materials + production cost
  • Unavailability/ shortage of Raw materials (Palm oil, tallow fats, soya oil, acid oil etc) required for Biodiesel manufacturing 
  • Poor quality of Raw materials which makes it difficult to maintain the BIS Specification requirement
  •  Skyrocketing price of available raw materials (INR 90- 135/kg) in the market due to high demand and low supply.

 Biodiesel market is very uncertain and fluctuating. For example, the current diesel rate is low as compared to Biodiesel which makes it difficult to sell in the local market and there is also No OMCs tender to buy our ready products. Biofuel and Biodiesel (You can find it here :- is the book I referred to, while writing this blog.

Prime Minister Narendra Modi in 2019 envisioned making India a USD 5 trillion economy and a global economic powerhouse by 2024-25 under “Make in India” and other big projects. I’m sure that Biodiesel will be one of the reasons which would help in making India a USD 5 trillion economy. Biodiesel, a better replacement of diesel.

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