Govt. of India Policy

New Delhi, the 4th June, 2018

F. No.P-13032(16)/18/2017-CC.—In exercise of the powers conferred under Government of India (Allocation
of Business) Three Hundred and Thirty Fifth Amendment Rules, 2017 published in the Gazette of India vide S.O.
No.2492 (E) dated the 4th August, 2017, the Central Government, through Ministry of Petroleum & Natural Gas, in
supersession of National Policy on Biofuels, promulgated through the Ministry of New & Renewable Energy, in 2009,
hereby makes a revised policy on biofuels, namely: —
1.  (1) This policy may be called National Policy on Biofuels,- 2018.
      (2) This policy shall be effective from the date of approval by the Cabinet i.e. 16-05-2018.
2. The Text of the policy is annexed. 

National Policy on Biofuels - 2018


1.1 India is one of the fastest growing economies in the world and will continue to enjoy the demographic dividend for
few decades. The Development Objectives focus on Samavesh – Inclusion, shared vision of National development,
technology upgradation & capacity building, economic growth, equity and human well-being. Energy is a critical input
towards raising the standard of living of citizens. The energy strategy of country aims to chart the way forward to meet
the Government’s recent ambitious announcements in the energy domain such as electrification of all census villages by
2019, 24×7 electricity & 175 GW of renewable energy capacity by 2022, reduction in energy emissions intensity by 33%-
35% by 2030 and share of non-fossil fuel based capacity in the electricity mix is aimed at above 40% by 2030. Even if
there is likely expansion in the energy contribution of oil, gas, coal, renewable resources, nuclear and hydro in the
coming decade, fossil fuels will continue to occupy a significant share in the energy basket. However, conventional or
fossil fuel resources are limited, non-renewable, polluting and, therefore, need to be used prudently. On the other hand,
renewable energy resources are indigenous, non-polluting and virtually inexhaustible. India is endowed with abundant
renewable energy resources. Therefore, their use should be encouraged in every possible way. This National Policy on
Biofuels – 2018 builds on the achievements of the earlier National Policy on Biofuels and sets the new agenda consistent
with the redefined role of emerging developments in the Renewable Sector.

1.2 The crude oil price has been fluctuating in the world market. Such fluctuations are straining various economies
the world over, particularly those of the developing countries. Road transport sector accounts for 6.7% of India’s Gross
Domestic Product (GDP). Currently, diesel alone meets an estimated 72% of transportation fuel demand followed by
petrol at 23% and balance by other fuels such as CNG, LPG etc. for which the demand has been steadily rising.
Provisional estimates have indicated that crude oil required for indigenous consumption of petroleum products in FY
2017-18 is about 210 MMT. The domestic crude oil production is able to meet only about 17.9% of the demand, while
the rest is met from imported crude. India’s energy security will remain vulnerable until alternative fuels to
substitute/supplement petro-based fuels are developed based on indigenously produced renewable feedstock. To address
these concerns, Government has set a target to reduce the import dependency by 10 per cent by 2022.”

1.3 Government has prepared a road map to reduce the import dependency in Oil & Gas sector by adopting a five
pronged strategy which includes, Increasing Domestic Production, Adopting biofuels & Renewables, Energy Efficiency
Norms, Improvement in Refinery Processes and Demand Substitution. This envisages a strategic role for biofuels in the
Indian Energy basket.

1.4 Biofuels are derived from renewable biomass resources and wastes such as Plastic, Municipal Solid Waste
(MSW), waste gases etc. and therefore seek to provide a higher degree of national energy security in an environmentally
friendly and sustainable manner by supplementing conventional energy resources,

1.5 Globally, biofuels assume importance due to growing energy security and environmental concerns. To
encourage use of biofuels several countries have put forth different mechanisms, incentives and subsidies suiting to their
domestic requirements. As an effective tool for rural development and generating employment, the primary approach for
biofuels in India is to promote indigenous feedstock production.

1.6 Over the last decade, Government has undertaken multiple interventions to promote biofuels in the Country
through structured programmes like Ethanol Blended Petrol Programme, National Biodiesel Mission, Biodiesel Blending
Programme. Learning from the past experiences and demand supply status, Government has revamped these programmes
by taking steps on pricing, incentives, opening alternate route for ethanol production, sale of biodiesel to bulk and retail
customers, focus on R&D etc. These steps have impacted the biofuels programme in the Country positively.

1.7 Biofuels in India is of strategic importance as it augers well with the ongoing initiatives of the Government such
as Make in India & Swachh Bharat Abhiyan and offers great opportunity to integrate with the ambitious targets of
doubling of Farmers Income, Import Reduction, Employment Generation, Waste to Wealth Creation. Simultaneously, the
existing biodiversity of the Country can be put to optimum use by utilizing drylands for generating wealth for the local
populous and in turn contribute to the sustainable development.

1.8 Globally, biofuels have caught the attention in last decade and it is imperative to keep up with the pace of
developments in the field of biofuels. This policy aims to bring in renewed focus taking into context the international
perspectives and National scenario primarily by utilization of indigenous feedstocks for production of biofuels. The Policy also dwells on the development of the next generation biofuel conversion technologies based on new feedstocks
and promote domestically available feedstock exploring, utilizing the Country’s biodiversity. Vision, Goals, Strategy and
Approach to the development of biofuels in India is set out through technological framework, financial, institutional
interventions and enabling mechanisms.


2.1 The Policy aims to increase usage of biofuels in the energy and transportation sectors of the country during the
coming decade. The Policy aims to utilize, develop and promote domestic feedstock and its utilization for production of
biofuels thereby increasingly substitute fossil fuels while contributing to National Energy Security, Climate Change
mitigation, apart from creating new employment opportunities in a sustainable way. Simultaneously, the policy will also
encourage the application of advance technologies for generation of biofuels.

2.2 The Goal of the Policy is to enable availability of biofuels in the market thereby increasing its blending
percentage. Currently the ethanol blending percentage in petrol is around 2.0% and biodiesel blending percentage in
diesel is less than 0.1%. An indicative target of 20% blending of ethanol in petrol and 5% blending of biodiesel in diesel
is proposed by 2030. This goal is to be achieved by-
              (a) reinforcing ongoing ethanol/biodiesel supplies through increasing domestic production,
              (b) setting up Second Generation (2G) bio refineries
              (c) development of new feedstock for biofuels
              (d) development of new technologies for conversion to biofuels.
              (e) creating suitable environment for biofuels and its integration with the main fuels.


3.1 The following definitions of biofuels shall apply for the purpose of this Policy:
i. ‘Biofuels’ are fuels produced from renewable resources and used in place of or in blend with, diesel,
petrol or other fossil fuels for transport, stationary, portable and other applications;
ii. Renewable resources are the biodegradable fraction of products, wastes and residues from agriculture,
forestry, tree based oil other non-edible oils and related industries as well as the biodegradable fraction of
industrial and municipal wastes.
3.2 The scope of the Policy encompasses following categories of fuels as “Biofuels” which can be used as
transportation fuel or in stationery applications:—
           i. ‘bioethanol’: ethanol produced from biomass such as sugar containing materials, like sugar cane, sugar
beet, sweet sorghum etc.; starch containing materials such as corn, cassava, rotten potatoes, algae etc.; and,
cellulosic materials such as bagasse, wood waste, agricultural and forestry residues or other renewable resources
like industrial waste;
          ii. ‘biodiesel’: a methyl or ethyl ester of fatty acids produced from non-edible vegetable oils, acid oil, used
cooking oil or animal fat and bio-oil;
         iii. ‘Advanced biofuels’: Fuels which are (1) produced from lignocellulosic feedstocks (i.e. agricultural and
forestry residues, e.g. rice & wheat straw/corn cobs & stover/bagasse, woody biomass), non-food crops (i.e.
grasses, algae), or industrial waste and residue streams, (2) having low CO2 emission or high GHG reduction and
do not compete with food crops for land use. Fuels such as Second Generation (2G) Ethanol, Drop-in fuels,
algae based 3G biofuels, bio-CNG, bio-methanol, Di Methyl Ether (DME) derived from bio-methanol, biohydrogen,
drop in fuels with MSW as the source / feedstock material will qualify as “Advanced Biofuels”.
        iv. ‘drop-in fuels’: Any liquid fuel produced from Biomass, agri-residues, wastes such as Municipal Solid
Wastes (MSW), Plastic wastes, Industrial wastes etc. which meets the Indian standards for MS, HSD and Jet
fuel, in pure or blended form, for its subsequent utilization in vehicles without any modifications in the engine
systems and can utilize existing petroleum distribution system.
       v. ‘bio-CNG’: Purified form of bio-Gas whose composition & energy potential is similar to that of fossil
based natural gas and is produced from agricultural residues, animal dung, food waste, MSW and Sewage water.