State-owned oil marketing companies are selling diesel containing between 0.5% and 5% biodiesel at selected retail outlets across India, depending on availability, as international fuel prices climb amid the war in West Asia. Private fuel retailers have raised petrol and diesel prices, while public sector companies continue to hold their rates despite mounting losses.
An industry executive said Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) were supplying biodiesel-blended diesel at certain locations. The biodiesel content in the batches ranges from 0.5% to 5%, with the latter known as B5.
Dealers report B2 and B5 diesel supplies
A random survey of fuel stations in Karnataka and Uttar Pradesh found that retail outlets were not explicitly displaying the proportion of biodiesel mixed with regular diesel. However, some dealers privately confirmed receiving blended fuel and shared invoices showing B2 and B5 supplies, requesting confidentiality over fears of reprisals.
The invoices identified the fuel as HSD-BSVI-B2 and HSD-BSVI-B5. HSD refers to high-speed diesel, while BSVI denotes Bharat Stage VI. The B2 and B5 labels indicate that the respective batches contain 2% and 5% biodiesel.
India's National Policy on Biofuels, released in 2022, envisaged a target of 5% biodiesel blending in diesel by 2030. An executive with an oil marketing company said the current blending programme was in line with the approved policy, but the average nationwide blending rate remained around 0.5%.
According to information on Indian Oil Corporation's website, the company procured around 200 million litres of biodiesel between April 2024 and February 2025, achieving an average biodiesel blending rate of 0.57% in diesel.
Dealers question how blending compliance can be verified
The reported supplies have raised questions about how fuel dealers are expected to verify blending levels when the process takes place upstream, before the fuel reaches retail outlets.
Hemant Sirohi, a dealer based in Uttar Pradesh, raised the issue on X, questioning how dealerships could independently confirm the prescribed biodiesel percentage in high-speed diesel when the blending is carried out before delivery.
He wrote: “A critical compliance question for OMCs and authorities: If the MDG places responsibility on the dealership to verify blending parameters, how is a dealer expected to independently verify the prescribed blending percentage in high-speed diesel (HSD), particularly when blending is carried out upstream?”
Sirohi reiterated the concern to Hindustan Times, highlighting the challenge of ensuring compliance with marketing discipline guidelines when dealers may not have the means to independently test the fuel supplied to them.
Biodiesel's impact on engines and uncertainty over feedstock
Some dealers said the biodiesel content in certain supplies appeared to exceed the nationwide average of 0.57% cited by Indian Oil. Experts who did not wish to be identified said blends of B5 or lower were likely to have minimal to negligible effects on diesel engine performance.
However, a Delhi-based fuel dealer said the source of the biodiesel remained unclear, including whether it was produced from plant-based feedstock such as jatropha and karanjia or derived from animal waste.
The development comes amid wider debate over India's fuel-blending programmes. Under the Ethanol Blended Petrol programme, the country reached its target of 20% ethanol blending in petrol in 2025-26, five years ahead of schedule. The rapid rollout of E20 has also prompted concerns among consumers about vehicle compatibility, mileage and the availability of E10 or unblended petrol.
State-run retailers hold prices despite rising crude costs
The blending of biodiesel is taking place against a backdrop of rising international oil prices and pressure on public sector fuel retailers to maintain domestic rates.
A dealer said private companies had recently increased petrol prices by ₹5 per litre and diesel prices by ₹3 per litre. In contrast, IOC, BPCL and HPCL have continued to hold retail prices, even as higher input costs weigh on their finances.
The dealer said consumers were shifting from private fuel stations to outlets operated by state-owned companies, potentially increasing the public sector retailers' losses as demand moved towards their pumps.
India imports more than 88% of the crude oil it processes, leaving its fuel market exposed to movements in global prices. The country's average crude oil import price rose by more than 13.4% to $122.33 per barrel on October 13, compared with $107.84 per barrel on May 25, when public sector fuel retailers last raised prices.
Despite the increase in crude costs, state-run oil marketing companies continue to sell petrol at ₹102.12 per litre and diesel at ₹95.20 per litre in Delhi.
IOC, BPCL, HPCL and the Ministry of Petroleum and Natural Gas did not respond to queries on the biodiesel blending arrangements.