The Biodiesel Association of India (BDAI) has warned that the country’s biodiesel industry is facing a “severe crisis” following repeated breaches of government assurances under the 2018 National Biofuel Policy, non-purchase of biodiesel by Oil Marketing Companies (OMCs), and steep price cuts.
Under the National Policy on Biofuels notified in June 2018, the Ministry of Petroleum and Natural Gas had assured entrepreneurs that all biodiesel produced would be purchased, with mandatory blending targets later fixed in September 2022. Relying on these commitments, over 150 MSME units set up biodiesel plants across India.
However, the industry alleges that OMCs failed to lift supplies despite issuing Letters of Intent, forcing many firms into heavy losses. Matters worsened in March 2025 when the KPMG-managed pricing mechanism was scrapped and tenders were reissued at ₹80 per litre—over ₹21 lower than the previous formula—despite a sharp rise in raw material costs.
While ethanol blending targets have been enforced and expanded, biodiesel blending has lagged significantly, slipping to just 0.60% in FY25 against the 5% target by 2030, according to India Ratings. Producers are also barred from domestic retail sales and exports, leaving them dependent on OMCs as sole buyers.
BDAI Vice President Dharamvirsingh Gangasingh Rajpurohit said, “We invested based on government promises. Today, thousands of families, crores of rupees, and India’s clean-fuel goals are at risk. We only seek fair enforcement of the policy and justice.”
On September 16, the Supreme Court issued notices to the government and other parties on BDAI’s writ petition, directing them to respond within three weeks. The association has demanded penalties on OMCs, restoration of the KPMG pricing formula, and permission to export biodiesel.
BDAI has also urged Prime Minister Narendra Modi to intervene, enforce blending mandates, and ensure fair pricing. Without urgent government action, the association warned, India’s biodiesel MSME sector risks collapse, undermining both livelihoods and the country’s clean energy ambitions.