India Seeks to Expand Biofuels Market to $7.5 Billion by 2022

India is targeting a more than sevenfold expansion in its biofuels market over the next six years, stepping up the country’s efforts to cut its reliance on energy imports.

Blending five percent of biodiesel with regular diesel and 10 percent ethanol with gasoline could boost the market to 500 billion rupees ($7.5 billion) by 2022, from about 65 billion rupees now, Oil Minister Dharmendra Pradhan said Wednesday. India would require 6.75 billion liters of biodiesel and 4.5 billion liters of ethanol for blending over the six years, he said.

The $2 trillion economy has struggled for about a decade to blend more ethanol with gasoline, and biodiesel with regular diesel. The goal this year is five percent blending for both gasoline and diesel. India, whose crude consumption growth is expected to outstrip all other nations in the decades ahead, imports about 80 percent of its crude requirement. It is aiming to reduce its overseas energy purchases by 10 percentage points by 2022, through increased domestic output and greater use of alternative fuels.

“Growth in the biofuels market will help India reduce import dependence,” Pradhan said at a conference in New Delhi.

Biofuel Projects

State-run fuel retailers Indian Oil Corp., Bharat Petroleum Corp. and Hindustan Petroleum Corp. are together investing 90 billion rupees to develop infrastructure for biofuels and build ethanol plants, according to the oil ministry.

Companies such as Austria’s Munzer Bioindustrie GmbH, India’s Praj Industries Ltd. and CVC India Infrastructure Pvt. are also planning biofuel projects.

“We are preparing to build multiple biofuel projects for nearly 30 billion rupees over the next two years and will also raise funds for the same,” said Pramod Chaudhari, executive chairman at Praj Industries.

To help achieve the blending targets, the government will consider meeting the shortfall between the costs and estimated revenues from biofuel projects to make them viable.

“The ministry of new and renewable energy and oil ministry are working on a new scheme for providing viability-gap funding for biofuel projects,” Renewable Energy Minister Piyush Goyal, who also handles the power ministry, said at the conference.

©2016 Bloomberg News

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