NITI Aayog, in January 2026, released a report suggesting how India can utilise its excess biomass reserves to create an international biofuels centre by building up the capacity of biorefineries and addressing gaps in financing. The report provides a pathway for India to progress beyond merely achieving national blending targets by expanding production capabilities for biofuels and adopting new technologies.

The report outlines feedstock availability, the volume of transportation fuel, and growing demand for low-carbon fuels as factors that will help determine the way forward.

The report estimates that by mid-2025, India will have reached the target of 20% blending of petrol (E20) with ethanol. Furthermore, by 2047, the total surplus of food grains in India is expected to exceed 40 million tonnes annually, meaning there will be sufficient quantities available to produce around 16 billion litres of ethanol per year without impacting food security.

To this end, the report identifies the need to expand the number of second-generation ethanol plants and compressed biogas (CBG) plants utilising agricultural residues and other biomass not consumed as food or animal feed. The use of these facilities would enable crop waste to be recycled rather than burned, leading to a reduction in open-field burning.

The report also recommends the use of viability gap funding to incentivise the development of second-generation plants, thereby reducing risk for investors while increasing the number of such plants being built.

Sustainable aviation fuel (SAF) has been identified as another area for growth. The report states that by 2070, total global demand for SAF is expected to reach approximately 32 billion litres. It also notes that aligning domestic fuel standards with international standards could help facilitate exports from India to other parts of the world.

Financing the transition to net zero in India across sectors is identified as a major barrier. NITI Aayog estimates that the transition to net zero will cost $22.7 trillion by 2070, with a $6.5 trillion financing gap. The report recommends expanding green bond funding frameworks, strengthening blended finance mechanisms, and mobilising international climate finance. It also emphasises the need for risk-sharing instruments and long-term policy certainty to attract private capital.

The outcome of coordinated policy measures, infrastructure development, and capital mobilisation will substantially affect the pace of expansion. Scaling production will depend on the availability of feedstock supply chains, the delivery of technologies, and sustained investment over time.