India's Green Overhaul: Turning Used Oil into an Economic Asset

MUMBAI, India – March 13, 2026 – In a landmark move set to reshape India's industrial landscape, Re Sustainability and Indian Oil Corporation Limited (IOCL) have signed an exclusive Memorandum of Understanding (MoU) to launch the nation's first structured, integrated ecosystem for recycling used lubricating oil. This pioneering collaboration aims to transform a significant environmental liability into a valuable resource, bolstering India's energy security and accelerating its transition to a circular economy.

The partnership will establish a dedicated Special Purpose Vehicle (SPV) to build a comprehensive nationwide network for the collection, logistics, and re-refining of used lubricants. By formalizing this process on an industrial scale, the initiative seeks to drastically reduce pollution, conserve resources, and decrease the country's dependence on imported crude oil.

A Sea of Wasted Potential

India, the world's third-largest lubricants market, generates approximately 1.3 million tonnes of used lubricating oil annually. However, a staggering gap exists between generation and responsible management. Current estimates show that less than 15%, or around 200,000 tonnes, is recovered through the formal recycling sector.

The remaining million-plus tonnes fall into a grey zone of mismanagement. Much of it is handled by the informal sector, where it is often burned inefficiently as a cheap furnace fuel or improperly dumped, leading to severe environmental consequences. Used oil is laden with heavy metals and toxic chemicals. A single litre can contaminate up to one million litres of fresh water, posing a grave threat to water supplies and aquatic ecosystems. When burned without proper treatment, it releases a cocktail of pollutants, including sulfur dioxide and dioxins, contributing to air pollution and significant public health risks.

This mismanagement not only pollutes the environment but also represents a massive economic loss. With domestic base oil production insufficient to meet demand, India imports substantial quantities, pressuring its foreign exchange reserves. This initiative directly addresses this paradox by creating a system to reclaim the value locked within this hazardous waste stream.

A Blueprint for a Circular Economy

The collaboration between Re Sustainability, a leader in environmental services, and Indian Oil, the nation's largest energy company, creates a powerful synergy. The joint venture will leverage Indian Oil's vast distribution network and market presence with Re Sustainability's expertise in waste management and circular economy technologies.

"As India's largest integrated energy company, Indian Oil is committed to advancing solutions that strengthen energy security and environmental responsibility," said Mr. Bankim Patra, Country Head (Lubes) for Indian Oil Corporation Limited. "This collaboration supports the creation of sustainable value chains for responsible recovery, reuse, and circular utilisation of lubricants."

The core of the initiative is the creation of an end-to-end ecosystem. A nationwide reverse logistics platform will aggregate used oil from diverse sources, including industrial workshops and automotive service centers. The partnership targets an ambitious annual collection of 100,000 tonnes of used oil, tracked through a sophisticated logistics and traceability system.

This collected oil will feed a new, state-of-the-art re-refining facility with a planned capacity of 50,000 to 100,000 tonnes per annum. The facility will produce high-quality Group I and Group II+ Re-Refined Base Oils (RRBO), which can then be reintroduced into the lubricant manufacturing process. The initiative will also tackle the plastic waste associated with the industry by integrating a system for recovering and recycling plastic lubricant containers, aligning with India's Extended Producer Responsibility (EPR) regulations.

Mr. Masood Mallick, Managing Director & Group CEO of Re Sustainability Limited, emphasized the project's transformative potential. "Our partnership with Indian Oil marks a transformative step towards institutionalising oil recycling at industrial scale in India," he stated. "By building an integrated ecosystem for used lubricant recovery and re-refining, we are enabling the transition from waste management to resource recovery while strengthening India's environmental infrastructure and circular economy."

The Power of Re-Refining

The concept of recycling oil is not new, but the technology has evolved dramatically. Modern re-refining is a sophisticated process that uses techniques like filtration, distillation, and hydrotreating to strip away contaminants, additives, and degradation products from used oil. The result is a high-quality base oil that is often indistinguishable from, and sometimes superior to, its virgin counterpart.

The facility planned by the partnership will produce Group II+ RRBO, a premium-grade product known for better oxidative stability and viscosity, making it suitable for modern high-performance engines and industrial applications. This move counters outdated perceptions of recycled oil as an inferior product. With growing approval from Original Equipment Manufacturers (OEMs), RRBO is gaining significant traction in global markets.

The environmental benefits of re-refining are substantial. Producing base oil from used lubricants uses 50-80% less energy and can reduce carbon emissions by up to 80% compared to refining it from crude oil. By creating a closed loop, this circular approach prevents hazardous waste from polluting the environment and conserves a finite natural resource.

Economic Engine and Regulatory Tailwinds

This venture is not just an environmental win; it is a strategic economic move. By creating a domestic source of high-quality base oil, the initiative will help insulate India from volatile global crude prices and reduce its import bill, saving valuable foreign exchange. The development of a nationwide collection and processing infrastructure is expected to create thousands of green jobs across logistics, technology, and plant operations.

The timing of this partnership is impeccable, aligning perfectly with a strong push from the Indian government to foster a circular economy. A key catalyst is the mandatory Extended Producer Responsibility (EPR) framework for used oil, which came into effect in April 2024. This regulation legally requires lubricant producers to ensure a progressively increasing percentage of their product is collected and recycled, with targets set to reach 50% by 2031.

This policy creates a clear market-based mechanism, including a system for trading EPR certificates, that incentivizes and supports formal recycling operations. It effectively turns a regulatory requirement into a viable business opportunity, providing the tailwinds needed for large-scale projects like the one announced by Re Sustainability and Indian Oil to succeed and thrive. This strategic alliance thus serves as a powerful blueprint for how corporate collaboration, technological innovation, and supportive government policy can converge to solve complex national challenges and build a more sustainable and resource-efficient future for India.