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Abstract
The Government of India had launched the National Biofuel Mission in the year 2003 as an initiative to limit
the country’s dependence on crude oil imports. An integral part of this mission is the Biodiesel Blending
program and Jatropha, a tree-borne biodiesel yielding crop, is the cornerstone of the program. This study
has been specifically designed to carry out economic assessment of the upcoming jatropha-based biodiesel
value chain in the country. The study, based on primary data collected from three major jatropha growing
states, has observed that jatropha cultivation is an economically viable proposition in the long-run as
indicated by favourable values of net present value, internal rate of return and benefit cost ratio.
Nevertheless, initial government support till attaining break even point is crucial to sustain the interest of
the farmers. The jatropha seed processing industry has been found to be viable if operated at sufficient
economies of scale, which in turn is determined by the level of backward integration with the seed market
and a forward integration with biodiesel distribution channels. However, the existing biodiesel value chain
in India lacks this integration and is characterized by under-developed seed markets, sub-optimal processing
infrastructure and ill-defined biodiesel distribution channels. The involvement of corporate players to
participate in processing and distribution activities has further delayed the program to take off. The study
has cautioned that unless proactive orientation of all the stakeholders is ensured, the program may fail to
meet its objectives, at least in the medium-term.