Japan to fund $400 million bamboo biofuel refinery project in India

Japan Bank for International Cooperation and private banks to invest around $408 million in bamboo-to-biofuel refinery in Assam, marking Japan's largest clean energy investment in northeast India

Japan is set to extend upto 60 billion yen (approximately $408 million) in public and private sector funding for a biofuel initiative in India that will convert bamboo biomass into automobile fuel. According to a report by Nikkei Asia, this marks the largest financial assistance by Japanese institutions in northeastern India and aligns with Tokyo’s push towards clean energy solutions.

 

The funding package will come from the Japan Bank for International Cooperation, a government-backed lender, alongside private-sector participants such as Sumitomo Mitsui Banking Corporation. Japan Bank for International Cooperation (JBIC) alone will contribute $244 million of the total financing.

   

PFC to lead Assam bamboo refinery

The project is being spearheaded by state-run Power Finance Corporation (PFC). The initiative comes under Japan and India’s collaboration on sustainable energy.

 

The loan will be channelled through PFC to Assam Bio Ethanol Private Limited (ABEPL), which will operate a new refinery in Assam’s Golaghat district. The facility, nearing completion, will produce biofuels from locally grown bamboo.

 

The refinery is expected to produce 49,000 metric tons of bioethanol annually, which will be sold as a petrol additive in India. It will also manufacture 11,000 tons of acetic acid, used in adhesives and various products, and 19,000 tons of furfural, a raw material for synthetic resins. Leftover biomass will be utilised to generate electricity, ensuring zero waste.

 

Boost for India’s ethanol blending goals

The project aligns with India’s E20 programme, which promotes blending petrol with 20 per cent ethanol to cut fossil fuel imports. Prime Minister Narendra Modi launched E20 petrol in 2023, and the government plans to issue guidelines for 27 per cent ethanol blending by the end of August. 

Currently, vehicles can run on E20 petrol with minor engine adjustments to prevent corrosion.

 

Japan to provide technical expertise

Japan will also extend technical expertise for biofuel production, with Japanese distillation equipment already installed at the refinery. Discussions are underway to adopt Japanese fermentation technology. Additionally, Japan aims to promote bamboo-based industries in India, boosting farmers’ income in the region.

 

PM Modi’s Japan visit

Prime Minister Narendra Modi begins a two-day visit to Japan on Friday, with officials indicating that Tokyo may pledge more than $68 billion in investments across a range of sectors in India.

 

Modi’s visit comes following the United States’ decision to impose steep 50 per cent tariffs on Indian exports to the US. This has prompted the Indian government to launch an outreach programme in 40 countries, including the UK, Japan, South Korea, Germany, France, Italy, Spain, the Netherlands, Poland, Canada, Mexico, Russia, Belgium, Turkiye, the UAE, and Australia.