Biofuels are fuels produced from biomass resources which include organic non-fossil material of biological origin. Biofuels like ethanol, biodiesel and green diesel are produced from various feedstocks like sugarcane, corn, agricultural waste, industrial waste and algae. Biofuels provide an renewable and cleaner source of energy and help reduce dependence on imported petroleum fuels. In India, biofuels are majorly produced from feedstocks like sugarcane molasses and non-edible oils from plants.
The India biofuels market is estimated to be valued at US$ 2.56 Bn in 2023 and is expected to exhibit a CAGR of 22% over the forecast period 2023 to 2030, as highlighted in a new report published by CoherentMI.
Market Opportunity:
The rising demand for green and environment-friendly fuels in the transportation and power generation sectors provides significant market opportunity for biofuels in India. With growing environmental concerns and push for green policies by the government, the demand for biofuels as an alternative to fossil fuels is expected to witness strong growth over the coming years. The nation aims to achieve 20% ethanol blending in gasoline and d 5% biodiesel blending in diesel by 2030 which will boost biofuels production and consumption multi-fold in the coming decade. Growing awareness among consumers towards sustainability is further expected to drive adoption of biofuels like biodiesel in vehicles and green diesel for power generation.
Porter's Analysis:
Threat of new entrants: The threat of new entrants is moderate as the biofuels industry requires high initial investment and technologies. However, government support benefits new players.
Bargaining power of buyers: The bargaining power of buyers is moderate due to the presence of several fuel distributors in the country. Buyers can negotiate on price and quality with producers.
Bargaining power of suppliers: The bargaining power of suppliers is low as key raw materials such as sugarcane and corn are available locally. However, suppliers of technologies have some bargaining power.
Threat of new substitutes: The threat of new substitutes is high as conventional fuels continue to dominate the transport sector in India. Electric vehicles pose a threat to biofuels market growth.
Competitive rivalry: The competitive rivalry is intense due to the presence of major oil companies and emergence of startups in the Indian biofuels market.
India biofuels Market Segmentation:
- By Feedstock
- Ethanol
- Biodiesel
- Biogas
- Others (PVO, SVO, Biobutanol, etc.)
- By Application
- Fuel
- Power Generation
- Others (chemicals, solvents, etc.)
- By Technology
- First Generation
- Second Generation
- Third Generation
SWOT Analysis:
Strengths: Growing focus on renewable fuels; supportive policies by central government; availability of feedstocks.
Weaknesses: High dependence on imported technologies; lack of infrastructure for distribution of biofuels.
Opportunities: Prospects in aviation biofuels; growth in automobile sector; expansion of 2G ethanol plants.
Threats: Lower crude oil prices affecting adoption; lack of coordination among stakeholders; minimal blending targets.
Key Takeaways:
The India Biofuels Market Size is expected to witness high growth driven by supportive government policies, focus on reducing oil import dependence, and availability of domestic feedstock. The market size is projected to reach US$ 2.56 billion by 2024 growing at a CAGR of 22% during the forecast period.
Regional Analysis: The southern region led by Karnataka and Tamil Nadu dominates the India biofuels market currently accounting for over 30% share due to presence of major sugarcane producers. States like Uttar Pradesh and Maharashtra are fastest growing markets backed by increasing number of ethanol plants.
Key Players: Key players operating in the India biofuels market are Reliance Industries, Indian Oil Corporation, Bharat Petroleum, Hindustan Petroleum, Tata Chemicals, Praj Industries, Cargill India, Emami Agrotech, Godrej Agrovet, Pan Bio Energy. Major players are focusing on capacity expansions and partnerships to strengthen their market position.
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