Indian biofuel sector: in the context of National Biofuel Policy.

Abstract

India, is the fifth largest and one of the fastest growing petroleum consumers in the world, needing to import over 72% of its requirement of crude oil and petroleum products. Price volatility and high crude oil prices has created an opportunity for integration of biofuels in the energy portfolio which may help to counter the security threat of energy supply to India with proper policy interventions. But there are certain issues that plague the growth of Indian biofuel sector. This paper discusses National Biofuel Policy with particular reference to feedstock supply, processing, marketing and distribution of biofuels, financing, fiscal incentives and research and development. The paper concludes that the availability of feedstock along with proper pricing of feedstock especially in case of non-edible oilseed is critical. Contract farming as well as wasteland usage can be a solution, but land misappropriation needs to be guarded. The minimum purchase price of the biofuels should be sufficient to cover the cost of production. Combination of support for the research and development in biofuels, availability of funding and providing appropriate incentives for biofuels producers is likely to facilitate the expansion of the sector.