Set-up Bio-Diesel Production Unit in India

Set-up Bio-Diesel Production Unit in India


Environmental concerns, energy security concerns, and desires for economic progress contribute to a noticeable increase in India’s demand for sustainable energy sources. The necessity of switching to sustainable energy sources has become increasingly apparent as the country works to satisfy its energy demands while addressing the problems caused by climate change. Government schemes, rules, and regulations have further accelerated the need for sustainable energy. The Indian government has actively promoted the use of renewable energy technology through various incentives, subsidies, and regulatory frameworks. Due to this, the industry has drawn local and international investments, promoting its expansion and development. India mainly exports bio-diesel to Bhutan, Spain, and the Netherlands. In the year 2022, India exported around 10 million litres of bio-diesel.

What is BioDiesel?



(i.e., oil and fats) are filtered and combined with alcohol, often Methanol, and a catalyst to create biodiesel. The primary by-products of this process used commercially are ester and glycerol biodiesel.

Important characteristics of Bio-Diesel

  • Biodiesel is a renewable fuel.
  • Biodiesel is much safer to use.
  • Biodiesel is biodegradable.
  • Biodiesel is significantly less toxic then compared to others.
READ  Clarification on Centralised Information Management System (CIMS) 

Benefits of a Bio-Diesel Production Unit

  • Safety and Compatibility: Because biodiesel is chemically comparable to diesel fuel, modifying engines to utilize it is unnecessary. Additionally, biodiesel is secure to handle, and because it has more excellent flash points than regular diesel, it is safer to store and manage.
  • Agricultural and rural development: The production of biodiesel opens up new doors for expanding agriculture and rural development. Growing feedstock plants expands farmers’ sources of income and fosters job possibilities in rural areas. This reduces rural poverty and promotes economic development in agricultural areas.
  • Utilization of Existing Infrastructure: Dispensing and storage facilities for biodiesel are not independent. It is possible to convert existing storage tanks and traditional diesel distribution facilities to biodiesel. This lowers the requirement for new infrastructure and increases cost-effectiveness.
  • Working with oil marketing companies (OMCs): OMCs occasionally show interest in buying biodiesel derived from used cooking oil (UCO). Small-scale biodiesel producers now have more chances for collaboration, giving their products a stable market.
  • Benefits for the Environment: Using biodiesel combined with diesel reduces carbon monoxide, particulate matter, and unburned hydrocarbon emissions. This environmental benefit has helped biodiesel become increasingly popular in India and internationally.

National Policy on Bio-Fuels

The 2019 National Policy on Biofuels is expected to impact the demand for biodiesel significantly. The aggressive steps India has taken to advance more ecologically friendly fuel sources have considerably increased the country’s total need for biodiesel. Adopting cleaner fuel alternatives will steadily increase biodiesel usage as India expects its primary energy demand to double over the next 20 years. Notably, India’s transportation, railway, and industrial sectors emerge as key biodiesel users, providing the industry with several potentials for expansion.

READ  Depositor's remedy in case of defaults in repayment by NBFC

Steps to Set up a Bio-Diesel Production Unit

  • Research and feasibility study: Conduct in-depth research on the feedstock sources, market demand, and legal requirements for biodiesel manufacturing. Analyze the venture’s economic feasibility and potential difficulties.
  • Making a business plan: Make a thorough business plan that details the manufacturing process, infrastructure requirements, projected financial results, and marketing tactics. Adjust the programme to comply with India’s environmental and energy policies.
  • Compliance with laws and regulations: Determine and follow the required statutory and regulatory frameworks. Obtain permissions, licences, and approvals from pertinent local, state, and federal authorities.
  • Site selection and infrastructure: When choosing a location, consider aspects like closeness to feedstock supplies, transportation efficiency, and utility accessibility. Plan the layout of the industrial plant and acquire the necessary land.
  • Equipment and Feedstock acquisition: Identify and acquire the necessary production equipment, such as reactors, separators, pumps, and monitoring systems. Create trustworthy supply chains for feedstocks like animal fats, used cooking oil, and vegetable oils.
  • Installing and configuring: Install and assemble the equipment in accordance with safety regulations and industry requirements. For effective manufacturing, ensure the machinery is integrated and placed correctly.

GST On Bio-Diesel Production in India

The GST on biodiesel production in India is imposed at 12%.

What Licenses And Permits Are Required For Bio-Diesel Production?

To establish the business of Bio-diesel Production, the applicant first registered its entity as a Partnership, Company, or Limited Liability Partnership.

  • Factory Licenses:

District factory Inspectorate approval is required for setting up the Bio-diesel production factory.

READ  Tax Computation on House Property Income

Despite ignoring that Multi-feedstock Biodiesel Processing Plants are non-polluting, obtaining clearance from the pollution control board is mandatory.

  • Explosive License:

An Explosive License is required from the Directorate of Explosive to store Methanol.

Subsidy on Bio-diesel Production

A subsidy is a form of financial support or aid from the government or another organization to citizens, companies, or economic sectors. It aims to reduce financial burdens, advance particular endeavours, or fulfil specific policy goals. Typically, subsidies are given to promote the production, consumption, or distribution of commodities and services that are considered crucial for the well-being of society as a whole.Rs three lakhs per kilolitre to a maximum of Rs thirty crore on biodiesel production is a subsidy.


Creating biodiesel manufacturing facilities in India is a massive step towards a greener and more environmentally sensitive future in a world where in sustainable energy solutions are of utmost significance. Entrepreneurs can start on a journey that not only helps to reduce carbon footprints but also stimulates economic growth and development in communities by carefully considering regulatory, technological, and financial considerations. Beyond the decrease of harmful substances, biodiesel manufacturing has several advantages. By creating job opportunities and boosting local economies, it can have an impact on nearby communities.

Frequently Asked Questions

  1. How much does it cost to start a biodiesel plant?

    Starting a bio-diesel plant can range from Rs. 20 lakhs to Rs 20 crore.

  2. Is it profitable to make biodiesel?

    Yes, it is profitable to make bio-diesel; it can give a profit margin of up to 15%.

  3. Is biodiesel legal in India?

    Yes, bio-diesel is legal in India.

  4. Is biodiesel good business?

    Yes, bio-diesel is one of the attractive businesses that has been emerging.

  5. What plants are used to produce biodiesel?

    Some plants used to produce bio-diesel are palm, sunflower, soybean, or oilseed rape.

  6. What is the most common plant for biodiesel?

    Soybeans and rapeseed (canola) are used to make bio-diesel.



Trending Posted