changeadminAgriculture in India plays a crucial role in the livelihoods of millions, even though its contribution to the country’s Gross Domestic Product (GDP) is quite low.
In recent years, the agriculture sector in India has shown decent growth, averaging 5 per cent annually. However, its share is only 18 per cent of the country’s GDP and provides livelihood support to more than 40 per cent of the population.
The gap between agriculture’s employment and its contribution to GDP reflects inefficiencies and underdevelopment in the sector. To address this gap, augment agriculture’s growth potential, and create more jobs, especially in rural areas, the Indian government is pushing hard towards the biofuels sector.
The biofuel industry (which includes the production of ethanol, biodiesel, and biogas) can generate employment at various stages in the agriculture sector, such as cultivation, harvesting, processing, and transportation.
Biofuels encourage the cultivation of energy crops like jatropha, sugarcane, maize, and mustard, which can be grown alongside traditional crops. This diversification helps farmers generate additional income and also improves soil health through crop rotation.
Furthermore, by converting agricultural waste (like crop residues, straw, and other biomass) into biofuels, India can reduce waste, provide additional sources of income to farmers, and improve agricultural output by making better use of available resources.
The government can also reduce import dependency on oil and gas, which is the major burden on India’s finances and can contribute to reducing greenhouse gas emissions.
In 2018, the government launched India’s National Policy on Biofuels, and after achieving a 15% ethanol blend with petrol in 2024, it has set a target of 20% ethanol blending in petrol by this year. As per the government’s update, it has achieved about 18% blending till now.
Beyond blending targets, India established guaranteed pricing, long-term contracts, and standards and codes, pushing demand for crops like sugarcane and maize.
Ethanol derived from corn (maize) has emerged as a renewable and cost-effective alternative to fossil fuels. In less than 2 years, corn prices have gone from Rs 1800 per quintal to more than Rs 2500 per quintal, giving exponential returns to farmers.
Not just crop, the government is also working with farmers to financially utilize crop residue such as straw, leaves, husks, stalks, and other by-products left after harvesting crops like rice, wheat, maize, sugarcane, and others. These residues often go unused or are burned, causing air pollution and waste.
The government has promoted several projects by converting crop residue into Bio-CNG (Compressed Biogas), which is almost identical in composition to natural gas (mainly methane) and can be used as a fuel for vehicles, electricity generation, or industrial applications.
Several biofuel startups have emerged in India, offering an end-to-end solution to match the demand and supply of biofuels.
Companies like Pune-based BiofuelCircle and Tamil Nadu-based Buyofuel provide an innovative tech-enabled marketplace that connects biomass suppliers like farmers with bioengineering companies and biomass processors.
The digital platform enables buyers and sellers to connect easily, publish their requirements, and get the best deals.
Both startups have featured in the Change Started annual Indian Green Startup of the Year list, Buyofuel in 2021 and Biofuel Circle in 2024.
In another innovative project, CSIR- Central Road Research Institute and Praj Industries, an industrial biotech company, constructed India’s first sustainable road at National Highway 44 using lignin-based bio-bitumen. Lignin is a biopolymer that binds cellulose and provides stiffness to plants.
This eco-friendly technology can partially replace fossil-derived bitumen and offer sustainable solutions to the road infrastructure industry.
In an interview, India’s Minister for Road Transport & Highways, Nitin Gadkari, mentioned that lignin-based bio-bitumen is 50% better than petrol-based bitumen. He also referred to 400 bio-bitumen projects in process in the country, of which 60 have already started.
Interestingly, Minister Gadkari emphasised that farmers in India can not only be annadata (food-giver) but also urjadata (energy-giver), indhandata (fuel-giver) and hydrogen-giver.
He also expressed his confidence that the biofuel economy in India will fuel the agriculture growth rate, improve the rural economy, reduce import dependencies, and mitigate environmental challenges.
Financial Impact of Biofuel Economy in India
As per the details shared by India’s Ministry of Petroleum & Natural Gas, in the last ten years, ethanol blending in petrol has resulted in approximate savings of more than Rs. 1,08,655 crores ($12 bn+) of foreign exchange and payment of approx. Rs. 92,409 crores ($10 bn+) to the farmers.
During the same period, crude oil substitution of 18.5 million metric tonnes and net CO2 reduction of about 55.7 million metric tonnes was achieved. It is anticipated that 20% ethanol blending in petrol is likely to result in payment of more than Rs. 35,000 crores (~$4 bn) annually to the farmers.
Wrapping Up
As the world’s third-largest energy consumer behind China and the USA, India faces significant challenges but also presents opportunities to shape its energy future.
By focusing on expanding and exploring alternative renewable energy sources like biofuels, India can address its growing energy needs in a sustainable and environmentally friendly manner while maintaining its economic growth.
Several new opportunities can be developed around biofuel technology, research, production, and distribution, which can add value to the agricultural sector and boost GDP.
If biofuel production becomes competitive and efficient, India could export biofuels, especially to countries looking to diversify their energy sources, thereby generating additional income.
By integrating biofuels into the agricultural and energy sectors, India can create a more efficient, resilient, and sustainable economy where agriculture remains a central player in job creation and economic prosperity.
The article is written by Varun, founder of Change Started
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