The Biodiesel Association of India (BDAI) has sounded an alarm over a deepening crisis in the biodiesel sector, accusing the government and Oil Marketing Companies (OMCs) of failing to uphold commitments made under the 2018 National Biofuel Policy. The association warns that without urgent intervention, thousands of jobs, crores of investment, and India’s clean energy goals are at risk.
Policy Promises vs. Harsh Reality
The National Biofuel Policy, launched in June 2018, encouraged entrepreneurs to establish biodiesel plants with the assurance that OMCs would purchase all production. More than 150 MSME-run biodiesel units were set up across India based on these commitments, supported by a pricing mechanism approved by the Ministry of Petroleum & Natural Gas and managed by KPMG.
While OMCs purchased biodiesel under this formula until September 2024, the industry faced a major setback when tenders between October 2024 and September 2025 stalled. Despite issuing Letters of Intent at ₹91–₹101 per litre, OMCs did not lift stock, leaving producers burdened with raw material costs and unpaid loans. Matters worsened in March 2025 when the tender mechanism was scrapped and a fresh one issued at ₹80 per litre, forcing producers into losses of over ₹21 per litre.
Unequal Treatment and Mounting Losses
BDAI alleges that while ethanol blending orders were enforced and expanded, biodiesel blending targets were repeatedly deferred. The association highlights that biodiesel not only improves fuel efficiency and engine life but also significantly reduces emissions. However, producers remain barred from domestic retail and exports, making them entirely dependent on OMCs.
Crisis reaches judiciary
The crisis has now reached the judiciary. On September 16, 2025, a Supreme Court bench led by Chief Justice B. R. Gavai issued notices to the government and concerned parties, seeking a response within three weeks on BDAI’s writ petition.
Dharamvirsingh Gangasingh Rajpurohit, Vice President of BDAI, stated, “Our immediate demands are simple — impose penalties on OMCs, issue a formal government response within three weeks, and restore the KPMG pricing formula. Without these measures, MSMEs will not survive.”
He further emphasized that thousands of families and India’s clean-fuel future are at stake, urging the government to either enforce blending mandates or allow exports.
BDAI has appealed directly to the Prime Minister, demanding that OMCs be directed to honour tender commitments, fair pricing be reinstated, and export permissions be granted if domestic procurement continues to stall. The association cautions that the credibility of India’s Maharatna companies — IOCL, BPCL, and HPCL — is at stake if they continue to disregard contractual and policy commitments.
Unless resolved quickly, India’s biodiesel sector — once seen as a key driver of sustainable fuel transition — could face irreversible damage, undermining both economic and environmental goals.