Need phased, integrated approach combining regulatory reform, technology to transform India’s used oil recycling ecosystem: FICCI-RECEIC-Deloitte Report

Mar 25, 2025

 

• Resolve existing challenges of inefficient collection to limited advanced processing capacities to reduce dependence on import of virgin oil

 

 

NEW DELHI, 25 March 2025: India’s used oil recycling ecosystem is at an important juncture. Used oil, oil degraded by contaminants during use, can be re-refined to produce high-quality lubricants, offering significant environmental and economic benefits, highlights FICCI-RECEIC-Deloitte Report on ‘Advancing India’s Self-Reliance: Enhancing Circularity in Used Oil Management’, which was released during the ‘Global Symposium on Resource Efficiency & Circular Economy’ organized by ‘Resource Efficiency and Circular Economy Industry Coalition’ (RECEIC), jointly with FICCI and MoEF&CC, today.

 

The report states that despite its potential to reduce crude oil dependence, energy consumption and greenhouse gas emissions, the current system in India remains fragmented and largely informal. Inefficient collection and processing practices are currently leading to widespread environmental risks and lost opportunities for value recovery.

 

In response, the government has introduced the EPR framework, which mandates that producers recycle an increasing percentage of net used oil from 5 per cent in FY25 to 50 per cent by FY31. This phased approach will increase the EPR certificate requirement from approximately 0.08–0.09 MMT in the early phase to about 0.85––1.00 MMT by FY31, highlights FICCI-RECEIC-Deloitte Report. This analysis integrated insights from the Used Oil Working Group members and corroborative secondary sources. To achieve these targets and transform the used oil recycling landscape, it is essential to resolve the existing challenges ranging from inefficient collection to limited advanced processing capacities. This will help reshape India’s used oil ecosystem and reduce dependence on imports of virgin oil.

 

By FY31, the total lubricants market is projected to reach 5.0–6.0 MMT, including finished lubricating oils and process oils. The landscape of India’s lubricants market is projected to show a steady increase from ~4.2 MMT in FY22 to 4.8–5.6 MMT by FY29, with finished lubricants accounting for 55–60 percent of the total, while rubber process oils, transformer oils and white oils/light liquid paraffin constituting 40–45 per cent. The automotive segment accounts for 55–60 percent of finished lubricants, while the industrial segment contributes 40–45 per cent.

 

The report further states that the current landscape is characterized by a disjointed supply chain involving multiple actors—generators, collectors, aggregators, re-refiners and lubricant producers—whose interactions are marred by under-reporting, cash-based transactions and diversion of used oil into unauthorized channels. These inefficiencies are compounded by inadequate segregation practices, manual tracking systems and limited advanced re-refining capacities that restrict the production of RRBO that meet quality standards. This systemic fragmentation not only elevates costs and regulatory challenges but also impedes the sustainable management of used oil, posing serious environmental and public health risks.

 

A strategic roadmap is essential to transition from current inefficiencies to a sustainable future. Immediate actions for the short term (up to FY26) include establishing a National Used Oil Management Association to serve as the central governance body, mandating digital registration for bulk generators and deploying a robust track-and-trace system to ensure transparency.

 

Additionally, audits of existing recyclers and the creation of a tiered collection network will help streamline operations and integrate financial incentives. Furthermore, a concerted push to encourage the voluntary inclusion of RRBO in lubricant formulations—through proactive engagement with industry stakeholders—can stimulate market demand and foster sustainable practices.

 

Highlighting the initiatives, the report states that medium-term initiatives (FY27–FY28) should focus on expanding the formal collection framework to include the unorganized sector, using digital platforms for self-registration and building capacity through awareness and training programs. In addition, financial support for technology upgrades and regional testing facilities are critical to enhancing re-refining capacities and ensuring product quality.

 

The long-term measures (FY29 onwards) will involve systemic regulatory reforms and significant infrastructure investments. These include establishing demonstration facilities for advanced re-refining technologies, providing enhanced incentives for high-grade RRBO production and continuing capacity building for formalizing collection from the unorganized sector.

 

Through a phased, integrated approach that combines regulatory reform, technology upgrades and the formalization of the supply chain, India can transform its used oil recycling ecosystem. By aligning domestic policies with proven international practices, the proposed roadmap aims to secure a sustainable future. This includes reducing environmental risks and ensuring a reliable supply of re-refined lubricants that support the nation’s broader energy and climate goals.