Indian Oil and Re Sustainability Partner to Build India’s First Structured Used Oil Circular Economy Network

Indian Oil and Re Sustainability Plan Nationwide Used Oil Circular Economy Infrastructure

India’s lubricant industry may soon see a more structured approach to recycling used oil, following a partnership between Indian Oil Corporation Limited and Re Sustainability Limited aimed at creating a nationwide circular economy ecosystem for lubricants.

The two companies have signed a memorandum of understanding to establish a formal system for collecting, aggregating, and re-refining used lubricating oil across the country. The initiative is expected to build reverse logistics infrastructure and introduce large-scale re-refining capabilities that convert used oil into reusable base oils.

For India’s industrial and automotive sectors—major consumers of lubricants—the move represents a potential shift toward a more structured recovery and reuse model in an industry where most waste oil remains outside formal recycling channels.

Addressing a Major Gap in Used Oil Recovery

India generates roughly 1.3 million tonnes of used lubricating oil annually, but only a small portion enters the formal recycling ecosystem. Industry estimates suggest that about 0.2 million tonnes are currently processed through authorized channels.

This gap has several implications: environmental risks from improper disposal, loss of recoverable resources, and continued dependence on virgin crude-derived base oils.

The new initiative aims to address this gap by creating a dedicated special purpose vehicle (SPV) responsible for building a nationwide collection network. The platform is expected to aggregate used lubricants from multiple sources including:

• Automotive service networks
• Industrial facilities
• Logistics and transportation fleets
• Small-scale workshops and distributors

Once collected, the used oil will be processed into Re-Refined Base Oil (RRBO) and reintroduced into the lubricant production cycle.

Building Reverse Logistics for Circular Manufacturing

At the core of the partnership is the creation of a reverse logistics infrastructure designed specifically for lubricant recovery.

Unlike conventional waste management systems, reverse logistics networks require traceability, specialized storage, and regulatory compliance to ensure safe handling and efficient transportation of hazardous waste streams.

The proposed ecosystem will include:

• Nationwide aggregation points
• Logistics and tracking systems
• Industrial-scale re-refining facilities
• Digital traceability mechanisms

These elements together aim to create a structured supply chain for used oil recovery—something that has historically been fragmented across informal operators.

For the lubricant industry, such infrastructure could enable consistent access to re-refined base oils, potentially reducing the need for imported base stocks derived from crude oil.

Re-Refining Capacity and Technology Infrastructure

The partnership also plans to establish a re-refining facility capable of producing Group I and Group II+ base oils. These are commonly used in lubricant manufacturing.

Initial capacity targets include:

• 100 KTA annual used oil collection
• 50–100 KTA re-refining capacity

Group II+ base oils are increasingly used in modern lubricant formulations. That’s due to their higher purity and improved performance characteristics compared to traditional Group I oils.

The re-refining process typically involves removing contaminants, additives, and degradation products from used oil. That’s for restoring it to a quality suitable for new lubricant production.

Globally, re-refining has gained traction as an energy-efficient alternative to producing base oil from virgin crude feedstock.

Circular Economy Momentum in the Energy Sector

The collaboration reflects a broader shift in the energy and industrial sectors toward circular resource models.

Circular economy strategies aim to extend the lifecycle of materials. Mainly through recovery, recycling, and reuse—reducing environmental impact while improving resource productivity.

In the case of lubricants, re-refining is particularly attractive. That’s because used oil can often be recycled multiple times. That too without significant degradation in base oil quality when processed using advanced technology.

For companies like Indian Oil, integrating circular systems into lubricant value chains aligns with evolving sustainability strategies and regulatory expectations.

Integration with India’s EPR Regulations

The initiative also includes plans to recover and recycle plastic lubricant containers. This is an area increasingly governed by Extended Producer Responsibility (EPR) regulations in India.

Under EPR frameworks, producers are responsible for ensuring the collection and recycling of packaging materials introduced into the market.

By integrating container recycling into the used oil ecosystem, the project aims to create a more comprehensive resource recovery system that addresses both liquid and packaging waste streams.

Strategic Implications for CX and Digital Infrastructure

While the project is primarily positioned as an environmental and industrial initiative, it also carries implications for customer experience, digital ecosystems, and supply chain transparency.

For CX leaders in industrial sectors, several developments stand out:

1. Traceability as a Service Experience

Digital tracking systems for used oil collection could create new transparency standards across lubricant supply chains. Customers—particularly large industrial buyers—are increasingly seeking verifiable sustainability metrics.

2. Circular Economy as a Brand Differentiator

Companies offering lubricants with recycled base oil content may position themselves as environmentally responsible suppliers, influencing procurement decisions among sustainability-driven enterprises.

3. Platform-Based Ecosystems

A nationwide aggregation network effectively creates a multi-stakeholder platform connecting service centers, industrial users, recyclers, and lubricant manufacturers.

Such ecosystems often rely on digital platforms to coordinate logistics, compliance documentation, and performance reporting.

Implications for India’s Resource Security

India imports a significant portion of its crude oil requirements. By recovering usable base oils domestically through re-refining, circular systems could contribute—albeit modestly—to reducing import dependency.

In addition to energy security, formalizing the used oil recycling market could also bring more waste streams into regulated channels, reducing environmental risks associated with improper disposal or informal recycling practices.

Indian Oil: A Test Case for Industrial Circular Infrastructure

The success of the initiative will depend on several factors. Including effective collection networks, regulatory compliance, technology adoption, and industry participation.

If implemented at scale, the project could serve as a test case for circular infrastructure in other industrial sectors. Particularly those dealing with recoverable waste streams such as chemicals, plastics, and metals.

For CX and digital leaders observing the sustainability transition, the partnership illustrates how environmental infrastructure, supply chain digitization, and platform ecosystems are becoming increasingly interconnected in modern industrial strategy.

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