Bangalore, July 27, 2010: The Indian approach to biofuels is somewhat different from the current international approaches. Indian approach is solely based on non-food feed stocks to be raised on degraded or wastelands that are not suitable for agriculture, thus avoiding a possible conflict of fuel versus food security.
The Ministry of New and Renewable Energy (MNRE), Govt of India has announced the National Policy on Biofuels on December 23, 2009. The policy, approved by the cabinet envisages development of the next generation of more efficient biofuel conversion technologies based on new feedstocks. It sets out the vision, medium term goals, strategy and approach to biofuel development, and proposes a framework of technological, financial and institutional interventions and enabling mechanisms.
The goal of the policy is to ensure that a minimum level of biofuels become readily available in the market to meet the demand at any given time. An indicative target of 20 percent blending of biofuels, both for biodiesel and bioethanol, by 2017 is proposed. The policy document focuses on multi-sphere development both at the national and state level by promoting the biofuel plantation and processing.
A major thrust is given to innovation, R&D, and demonstration in the field of biofuels. R&D will focus on plantations, biofuel processing and production technologies, also on maximizing efficiencies of different end-use applications and utilization of byproducts.
Securing quality feedstock in right quantities is the biggest challenge for the biodiesel processors in India. The policy encourages contract farming in the degraded /forest/non-forest lands involving farmers/landless laborers. Also, the most encouraging clause is that the employment wages in jatropha plantations are linked to the National Rural Employment Guarantee Program (NREGP). Financing of biofuel plantation and processing being categorized as priority sector by the financial institutions and banks is again a positive section.
Import-export regulations in the policy protect the interests of the domestic players by putting appropriate checks on the imports of biodiesel. These shall trigger huge growth in the domestic plantation development and processing since the import of free fatty acids for biodiesel production is not allowed.
With a huge capital outlay and uncertainties on the pricing of the end product, the industry is less operational and also the new entrants do not find the segment lucrative. Infrastructure development facilitation across the entire value chain, encouraging innovative and cost-effective technologies, 100 percent foreign equity in the real assets of technologies and projects, and tax sops for import of required processing machinery shall boost the industry by attracting new entrepreneurs. Moreover, minimum purchase price (MPP) of biodiesel is linked to the retail price of the diesel and the price fluctuations do not have any bearing on the processors and is compensated by the government to the Oil Marketing Companies (OMC). Such policy initiatives make the projects financially more viable and overall industry shall be foreseen to be well-established and healthy.
“The policy is required to provide the guidelines within which different biofuel companies and associated industries can function. The policy will also help to regulate and protect consumer interest, besides creating a road map which will put all stakeholders on the same platform. Today, the lack of a biofuels blending policy concomitant with enforcement has resulted in investments that have been made without the commensurate returns,” observes Mr Shashank.
India has huge potential to emerge as a major biofuels market. The favorable sub-tropical climate, huge stretches of cultivable marginal lands and the natural resource wealth of the country stand as testimonials to the fact that the country has good scope for biofuel production.
“Blending mandate of 20 percent by the end of the year 2017 and the support package extended by the government in terms of tax sops and incentives are some of the eminent drivers of the industry. Other than the aforesaid factors, India with 70 percent of its population in the rural areas, has to focus on the production of green fuels especiallyS for rural electrification programs. The biofuels industry is still in its nascent stage in the country and is expected to take off as and when an organized industry status is given to the sector,” says Mr CS Jadhav, Director – Marketing, Nandan Biomatrix, Hyderabad, India.
Mr N Satish Kumar, Managing Director, Southern Online Bio Technologies, Hyderabad, India opined that the biodiesel industry in India is different from the global biodiesel industry, because other countries do not have much raw material resources, due to which they depend on edible oils for biodiesel production. “In India we have enough raw materials, which are non-edible, besides that, we still need to test more than 300 varieties of species that can be used as raw material to produce biodiesel. Another advantage is that India is an agricultural country and we have lot of barren land available with us, which can be used for the biodiesel plantation. Very soon India can emerge as global biodiesel leader, once all our existing available resources usage touches its optimum level.”
“India is the ideal country that can commercialize biofuels. Enabling macro-environment and the agro-climatic suitability for cultivation of energy crops are the conducive factors for India to become a major biofuel producer. Moreover, entry barriers for the industry are lowered in number with the announcement of the National Biofuel Policy. US and other European nations are seeking assistance from India for R&D and crop cultivation. So, India with strong existing players, new entrants and the institutions working towards the commercialization of biofuels is capable of becoming the world leader, “ says Mr Jadhav.
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