India may be sitting on a surprisingly large, underused energy and chemicals resource, and it is something as mundane as leftover frying oil.

A new report by FICCI and the RECEIC working group in collaboration with EY, reveals that used cooking oil (UCO) could become a meaningful feedstock for the country’s chemicals and materials industry, provided India can fix how it is collected and channelled.

The scale is not trivial. India’s edible oil availability has risen to 27.82 million tonnes in 2023-24. Of this, about 80% is used for cooking. After repeated use, and once oil crosses safety thresholds, roughly 30% of that volume remains recoverable as UCO. That translates into a potential 3.7 million tonnes of used cooking oil in 2024-25.

Yet only a fraction of this is currently being captured.

As Manish Sharma, chair RECEIC and former Panasonic chairman notes, “availability is significant, but fragmented aggregation systems present a clear opportunity for industry-led action to unlock both environmental and commercial value.” The oil exists, but the system to collect and reuse it efficiently does not.

Why is there a gap?

Today, much of India’s UCO is either discarded improperly or diverted back into the food chain, despite regulations that prohibit reuse beyond certain limits. The Food Safety and Standards Authority of India has capped total polar compounds at 25%, beyond which the oil should not be used for frying.

Even where formal channels exist, the ecosystem is patchy. The report notes that around 40% of registered biodiesel plants have no formal linkage with aggregators who collect UCO. Among those that do, most rely on one or two suppliers, indicating a shallow and fragmented supply chain.

This has direct implications for industries that could otherwise use UCO as a renewable input. For instance, India’s surfactants market alone, estimated at $2–3 billion and growing at 6–7% annually, could require up to 2 million tonnes of UCO each year if it were to transition meaningfully towards bio-based inputs.

Similarly, the push towards sustainable aviation fuel will need steady supplies. Even a 1% blending target by 2027 could require up to 0.20 million tonnes of UCO annually, rising sharply as blending mandates increase.

Beyond biodiesel to industrial transformation

So far, UCO’s primary use has been in biodiesel. About 55,000 tonnes of biodiesel produced annually in India is derived from used cooking oil, implying a similar level of UCO demand. That is a small slice of the estimated 3.7 million tonnes available.

The report’s central argument is that limiting UCO to biodiesel undersells its potential. It can be used across chemicals, polymers and other materials, sectors that are far larger and structurally dependent on fossil-based feedstocks.

According to Amit Kumar, partner at EY the shift requires a broader lens. He says that treating used cooking oil “as a strategic circular-carbon resource” is among the most practical choices available to India as it works towards its net zero goals. He adds that the report is meant to serve as a starting point for coordinated action across policy, industry and investment.

The economics, the report suggests, are not prohibitive. Many of the pathways to integrate UCO into chemical production can work with existing industrial capabilities. What is missing is scale, consistency of supply, and traceability. That is where policy and industry coordination will matter. Strengthening collection networks, incentivising aggregation, and ensuring traceability could unlock both climate and commercial gains.

For now, the gap between potential and utilisation remains wide. But if India manages to close it, yesterday’s frying oil could become a key input in tomorrow’s industrial transition.