§1What this business is
Oil or fat is filtered, treated with methanol and an alkali catalyst (esterification and transesterification), then the glycerol is separated, the biodiesel is washed and filled into drums. The report recommends non-edible vegetable oils and animal fats because oil cost decides profit. The unit runs in a rented shed.
Capacity: Tonnage not printed; the report plans 55% capacity use in year 1 (sales ₹81.51 lakh) rising to 75% in year 5 (₹141.73 lakh).
§2Is it right for you?
Who it is for
Someone with a chemistry or fuel-trade background who can secure a steady supply of used or non-edible oil.
Who it is not for
Someone without access to cheap oil or without a buyer for fuel-grade biodiesel.
Advantages
- Uses waste and non-edible oils, not food
- Sells as a direct diesel substitute
- Machinery is a set of tanks and reactors, no complex line
- Gross margin of about 19–23% in the report
Drawbacks
- Oil price decides profit; raw material is about two-thirds of sales
- Methanol and alkali catalysts need careful, safe handling
- Product must meet the BIS fuel standard before buyers accept it
- Biodiesel degrades in storage if exposed to heat, air or water
Skills you need
- Chemical process control (esterification, transesterification)
- Fuel quality testing
- Sourcing used cooking oil and non-edible oils
- Safe storage of methanol and fuel
Why difficulty 4/5: Chemical process, fuel-quality standard and heavy dependence on oil prices.
§3Market
Who buys
- Vehicle and transport fleet operators
- Industries running diesel generators, pumps or boilers
- Fuel blenders and oil companies buying biodiesel for blending
How it sells
- Direct bulk supply in drums or tankers
- Contracts with fleet and industrial users
Good to know
- The report expects sales of ₹81.51 lakh in year 1 rising to ₹141.73 lakh in year 5.
- Biodiesel stored for more than four to five months needs a stability additive, as per the report.
§4Raw material & machinery
| Item | Qty | Cost |
|---|---|---|
| Storage tanks for raw oil | — | — |
| Esterification tank | — | — |
| Transesterification tank | — | — |
| Glycerol reactor | — | — |
| Distillation unit with columns and condensers | — | — |
| Cooling tower | — | — |
| Receiver and finish (product) tanks | — | — |
| Oil filling machine, vacuum pump and piping | — | — |
| Complete plant (all of the above) | — | ₹16.50 lakh |
From: PMEGP sample project report — Biodiesel Manufacturing Unit (prepared by Udyami/Samadhan)
- Non-edible vegetable oils and animal fatsmain cost; ₹55.44 lakh in year 1 of the report
- Methanol (or ethanol)short-chain alcohol for the reaction
- Catalyst (NaOH, KOH or methoxide; sulphuric acid for high-acid oils)used in small quantities
- Drums, totes and packing materialairtight containers of steel, aluminium or fibreglass, not copper or brass
From: PMEGP sample project report — Biodiesel Manufacturing Unit (prepared by Udyami/Samadhan)
§5Licences & registration
- Udyam registration
- GST
- Fire safety NOC
- State Pollution Control Board consent
- Trade licence
- Factory licence (optional, as per the report)
- BIS certification
- Trademark for the brand (if needed)
§6Schemes & subsidies
- PMEGPCentralActive15–35% subsidy
- MudraCentralActiveLoan up to ₹20 lakh, no collateral
- CGTMSECentralActiveNo collateral, up to ₹10 crore
The report is a PMEGP sample; the cost is within PMEGP's manufacturing limit. MUDRA and CGTMSE can back the term loan.
§7Money
How the investment is worked out: Plant & machinery ₹16.50 lakh + other assets ₹1.00 lakh + working capital ₹7.22 lakh = ₹24.72 lakh. Land and building rented (not in the cost).
Working capital: Working capital ₹7.22 lakh, of which a bank working-capital loan of ₹6.50 lakh; raw oil alone is ₹55.44 lakh in year 1.
Year not printed on the report — check current machinery prices.
§8Export potential
Confirm the HS code in the DGFT ITC(HS) lookup before you export
- An IEC from DGFT is needed; check the DGFT export policy for heading 3826 before any contract.
§9Risks — where people fail
- Oil price swings
- Batch failing the fuel standard
- Fire and chemical accidents
- Changes in biofuel buying policy
§1030 / 60 / 90-day plan
A general plan that applies to any business. A plan for this business will be added after research.
- Days 1–30: Visit a working biodiesel manufacturing unit unit, ask 10 buyers about price and quantity, and get quotations from 3 suppliers.
- Days 31–60: Udyam and the licences you need (Udyam registration, GST), a project report (DPR), and the scheme or loan file.
- Days 61–90: Space and machines, trial production, and first deliveries to 10 customers.
§11Who to connect with
Associations, clusters and training institutes — the directory is being built. Connect
§12Watch
There is no episode on this business yet. Shows are coming soon on the Podcast page.
Want to start Biodiesel Manufacturing Unit?
DPR, loan file or registration — ask us on WhatsApp.
¶Sources
Data review: 6 October 2026. Spotted a mistake? Report it. For information only — not legal or financial advice.