Salient features of National Policy on Bio-fuels

A National Policy on Bio-fuels was announced by the government in December 2009 for development, production and use of Bio-fuels, which primarily include bio-ethanol for blending with petrol and bio-diesel for blending with diesel.

Bio-fuels provide a strategic advantage to promote sustainable development and to supplement conventional energy sources in meeting the rapidly increasing requirements for transportation fuels associated with high economic growth, as well as in meeting the energy needs of India’s vast rural population. Bio-fuels can increasingly satisfy these energy needs in an environmental-friendly and cost-effective manner while reducing dependence on fossil fuels and thereby providing a higher degree of National Energy Security.

The Indian approach to bio-fuels is based solely on non-food feed stocks to be raised on degraded or wastelands that are not suited to agriculture, thus avoiding a possible conflict between fuel and food security.  

The salient features of the National Policy on Bio-fuels are:

  • Bio-diesel production to be taken up from non-edible oil seeds in waste, degraded or marginal lands.
  • An indicative target of 20% blending of bio-fuels, both for bio-diesel and bio-ethanol, by 2017 has been proposed.
  • Minimum Support Price (MSP) for non-edible oil seeds to be announced with periodic revision to provide fair price to the growers.
  • Minimum Purchase Price (MPP) for purchase of bio-ethanol and bio-diesel to be announced with periodic revision.
  • Major thrust to be given to research, development and demonstration with focus on plantations, processing and production of bio-fuels, including Second Generation Bio-fuels.
  • Financial incentives, including subsidies and grants, to be considered for second generation bio-fuels. If it becomes necessary.
  • A National Bio-fuel Coordination Committee, headed by the Prime Minister, to be set up for providing policy guidance and coordination.
  • A Bio-fuel Steering Committee, chaired by Cabinet Secretary, to be set up for implementation of the Policy.

Bio-Ethanol Blending With Petrol

The subject of ethanol blending with petrol was taken up by the Cabinet Committee on Economic Affairs (CCEA) at its meeting held on 22 November, 2012. The CCEA decided the following:

  • The 5% mandatory ethanol blending with petrol as already decided by the CCEA in the past, should be implemented across the country from 30 June, 2013.
  • Procurement price of ethanol will be decided henceforth between OMCs and the suppliers of ethanol.
  • In case of any shortfall in domestic supply, the OMCs and Chemical Companies are free to import ethanol.

The Oil Marketing Companies (OMCs) are procuring Bio-ethanol for EBP Programme from domestic ethanol producers at ad-hoc ex-factory price of Rs. 27 per litre since November, 2010. 36.19 crore litres bio-ethanol was procured by OMCs for the EBP between November 2010 and September 2011 and for the period October 2011 to March, 2012 OMCs have procured 9.69 crore litres of bio-ethanol for EBP.


The Bio-diesel industry is still at nascent stage and since Bio-diesel is not available at the price declared by the OMCs, blending of Bio-diesel has not commenced yet.

The Ministry of New and Renewable Energy (MNRE) undertook a study to assess the status of Jatropha plantations on about 9.28 lakh hectares of wastelands in nine States - Andhra Pradesh, Chattisgarh, Karnataka, Madhya Pradesh, Odisha, Rajasthan, Tamil Nadu, Uttarakhand and Uttar Pradesh. It was found that the mortality of plantations was high and seed yields and oil contents were very low.

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