The Ministry of New and Renewable Energy has floated a draft National Policy on Biofuels suggesting that India offer several fiscal incentives and a National Biofuel Development Board to promote adoption of blended petrol and diesel. The proposal says that adoption of bio-fuel will greatly decrease the dependence of imports of fossil fuels. The fortunate side effect is reduced price of gasoline for the consumer.

Key feature of this proposal is an exemption of customs and excise duty for plant and machinery used to process oil seeds for bio-fuel production and tax breaks of blends with bio-fuel similar to the ones with ethanol.