For over a decade, India has chased a clean alternative for its diesel economy. Unlike petrol, where ethanol blending is a global success, diesel has remained stubbornly resistant. This is not for lack of trying. Governments worldwide have experimented with biodiesel, mandates, and alternative molecules. Some succeeded. Many did not. India, so far, falls in the latter category. But that may be about to change.

Why biodiesel worked and where India stumbled

Indonesia stands as the clearest biodiesel success: abundant palm oil, strict enforcement, and export levies have driven mandates from B30 to B40. India attempted a similar journey but from a very different starting point. Early reliance on jatropha and karanja failed due to inconsistent yields and poor economics. Later, attention shifted to used cooking oil (UCO), but scale has proven elusive – supply is fragmented, quality inconsistent.

Now, with India charting its Sustainable Aviation Fuel (SAF) roadmap, UCO is finding a more lucrative outlet in aviation. This creates structural competition, making it unlikely that UCO will anchor India’s diesel blending ambitions.

The Karnataka ‘diesohol’ experiment

India did attempt ethanol blending in diesel, notably in Karnataka, where BMTC buses ran on 7-8 per cent ethanol-diesel blends. While technically feasible, trials exposed fundamental limitations: ethanol is hygroscopic, causing phase separation in India’s climate; it reduces flash point; and it does not blend naturally without an imported emulsifier, creating dependence and cost. The Ministry of Petroleum has formally acknowledged these findings.

Why ethanol worked for petrol

India’s ethanol blending programme succeeded because it built on natural strengths: robust domestic feedstock (sugarcane and grains), existing infrastructure, assured pricing, and stable offtake. Diesel has so far lacked this alignment – making it the largest untapped opportunity in the nation’s energy security agenda.

Enter bio-isobutanol: A different solution

The next phase will not be built on traditional biodiesel. It will be built on better molecules. Bio-isobutanol addresses the very limitations that held ethanol and biodiesel back. It blends without an emulsifier and without changing the flash point. It carries higher energy density and behaves more like diesel in storage and transport. Crucially, it can be produced from the same feedstock base that already powers India’s ethanol success.

As Prakash Naiknavare, Managing Director of the National Federation of Cooperative Sugar Factories, says: India’s strength lies in scaling indigenously developed technologies globally. The success of ethanol blending shows how innovation can move from validation to commercial deployment. The same pathway is now open for bio-isobutanol.

The strategic opportunity

India today faces an unexpected challenge: excess ethanol capacity. Distilleries have scaled up, and supply is rising faster than blending demand. Bio-isobutanol offers a powerful release valve. With bolt-on modules in existing ethanol plants, producers can convert part of their output into isobutanol from the same feedstock – creating a parallel value stream without significant new infrastructure.

A 10 per cent bio-isobutanol blending mandate would be a logical starting point: technically feasible, economically viable, and scalable. But mandates alone will not suffice. As with ethanol, success will depend on pricing clarity, assured offtake, and ecosystem alignment – from producers to engine manufacturers.

This is not just a decarbonisation story. India remains heavily dependent on crude oil imports, with diesel forming the backbone of its transport and industrial economy. Even a marginal shift in substitution can translate into billions saved in import costs. For the first time in the diesel economy, India can bring together infrastructure, feedstock, and policy in a single aligned framework.

As Naiknavare underscores, the real question is no longer feasibility but how quickly India can build a complete ecosystem to scale bio-isobutanol. In essence, it offers India the opportunity to do for diesel what it has already done for petrol at an even larger economic impact.

(The author is Managing Director of Samarth SSK Ltd and Co-Chairperson of the Sugar Bioenergy Forum (SBF) under the Indian Federation of Green Energy.)

Published on April 12, 2026