Rising demand from transport sector boosts Indian biofuels markets

A strong economy, rising incomes, and a vibrant market have given a huge boost to the transport sector, which is the fastest growing energy-consuming sector in India. These trends have made a case for bio fuels in India, strengthened by the huge dependence on oil imports.

A new report from Frost & Sullivan, that provides a strategic analysis of the Indian bio fuels industry, reveals that the market is an emerging one and has a long way to go before it catches up with global competitors.

India''s crude oil and petroleum products supplies are largely import-dependant. With oil import expenditure increasing by more than six times in the last 25 years due to escalation in global demand and prices, bio fuels are expected to be pressed into service. Biofuels will be critical in reducing dependence on fossil fuels, achieving greater energy security, and reducing noxious emissions.

"The government is currently implementing an ethanol-blending programme and considering initiatives in the form of mandates for bio diesel," says Frost & Sullivan research analyst Hari Krishnan. "Due to these strategies, the rising population, and the growing energy demand from the transport sector, bio fuels can be assured of a significant market in India."

However, the lack of large-scale availability of feedstock restrains the market. Bio diesel will take a while to establish itself as an effective bio fuel, since Jatropha plantations in the country are still in the initial stages of development. Three to four years and many plantations later, the country may have the feedstock necessary for the large-scale production of jatropha oil for use in bio diesel.

The absence of a clear government policy on bio fuels and lack of availability of domestic feedstock has inhibited several bio fuel manufacturers from entering this market. Hence, Indian manufacturers are considering importing palm oil to produce bio diesel.