Biodiesel explained: Here's why India's clean fuel ambitions begin with used kitchen oil

After ethanol, India is now looking towards blending biodiesel as the country aims to create a sustainable blend of fuel for the people, which reduces emissions while switching towards a renewable source, in turn reducing dependence on imports.

With crude oil prices (Indian basket) rising to $107 per barrel as of November 2, 2026, a country which imports the majority of its crude oil from foreign nations to meet demand now needs several renewable energy sources to reduce dependency.

Latest report from ANI suggests that the State-owned oil marketing companies have collectively floated a joint tender to procure around 15 crore litres (1,50,000 kilolitres) of biodiesel at a base price of ₹88 per litre.

Indian Oil, Bharat Petroleum, and Hindustan Petroleum floated the joint tender, which is valued at around ₹1,320 crore, excluding transportation charges and goods and services tax (GST), according to the expression of interest (EOI) issued on October 30.

This comes at a time when the central government is pushing towards further diversification of agriculture towards the energy and power sector in the form of ethanol blending in petrol and biodiesel production and blending.

Several companies in India are manufacturing biodiesel made from used kitchen/cooking oil, non-edible vegetable oil and other acid oils, and only three companies are listed on the NSE and BSE indices, while the remaining are private or unlisted operations.

Kotyark Industries, Rajputana Biodiesel, and Solana Biofuels are the three listed biodiesel companies in the Indian stock market. These companies will potentially benefit from large biofuel tenders as the order inflows will boost revenue potential and profit growth.

Other prominent biodiesel manufacturers like Emami Agrotech, Universal Biofuels, and Altret Greenfuels are also expected to potentially benefit from the centre’s push towards further renewable fuel sources, specifically biodiesel.

Biodiesel stocks in focus

What is Biodiesel or B100?

Biodiesel (B100) is a type of biodegradable fuel or source of renewable energy which is manufactured from vegetable oils, animal fats or recycled cooking oil and used to generate power for fuel compression and ignition engines.

In its pure and unblended form, the Biodiesel is often known as B100 liquid fuel, much similar to the conventional petrol and diesel fuel. Biodiesel performs differently based on its blending level with conventional fuel sources.

“Biodiesel performance in cold weather depends on the blend of biodiesel, the feedstock, and the petroleum diesel characteristics,” according to the US Department of Energy data.

US Department of Energy data also highlighted that fuel blends which have smaller percentages of biodiesel (up to 5% blending) mixed with conventional fuel perform better in colder temperatures.

As Biodiesel is a relatively cleaner-burning renewable energy source, with similar properties to petrol and diesel, companies are looking to use biodiesel in place of petroleum diesel to significantly cut down lifecycle carbon emissions.

How much Biodiesel can be blended?

While lower Biodiesel blends are better for cold climates, India has a relatively hotter average temperature than the majority of other countries in the world.

Oil refining companies like Indian Oil, Bharat Petroleum, and Hindustan Petroleum, among others, will be blending biodiesel much like they are currently blending 20% ethanol into petrol, with the exception of 100-octane fuel.

Data shows that Biodiesel can be blended and used at several different concentration levels, with 20% being most common in several countries. “B20 is a common biodiesel blend in the United States,” as per the US Department of Energy data.

Investors should be aware that although ethanol blending has flared up concerns in the market about fuel system damage to vehicles due to the higher content of ethanol in fuel, the US Energy Department estimates that vehicles manufactured after 1994 meeting ASTM standards can be used with minimal impact on operating performance.

However, in India, it is yet to be determined whether or not Biodiesel blending will cause any impact on the vehicles in the market.

115 billion-litre market by 2035

Data collected from Expert Market Research showed that the global Biodiesel market is estimated to increase at a compound annual growth rate (CAGR) of 6.1% to eventually reach 115 billion litres by the year 2035.

The data also showed that as of the year ended 2025, the global Biodiesel market was at 63.66 billion litres, with the traditional fuel industry powering 80% of the demand in the market for blending purposes.

India is looking at something similar to switch towards biodiesel blends instead of regular pure diesel fuel in efforts to reduce the country’s reliance on fossil fuel sources, while providing a push for renewable energy.

Gadkari’s push for biofuels

Over the years, Union Minister Nitin Gadkari has pushed for renewable energy and lately fuel blending to achieve India’s goal of becoming self-reliant while powering the growth story with clean fuel sources.

In a recent event on November 2, Gadkari said that India needs to expand the use of its indigenous alternative fuel sources to reduce its dependence on fossil fuel imports from foreign nations.

“Our policy is import substitute, cost-effective, pollution-free, and indigenous,” said Minister Gadkari, according to an ANI report.

With a key focus on 100% bioethanol, ethanol-blending in petrol, and now PSU oil marketing companies procuring biodiesel, the broader message is clear that India is now looking towards alternative energy sources that have domestic sustaining capabilities.

However, there is a long road ahead for the transition as the centre pushes for the market to transition towards cleaner fuels.