For adeveloping nation like India, the current energy portfolio is dominated by fossil fuels such as oil, coal, and petroleum products. Due to the rapid depletion and limited available resources, the price of fossil fuel increases. Also, fossil fuel induces climate change, environmental pollution, andrising global temperature. There is urgent need to shift from conventional energy to renewable energy source for sustainable and economic growth and to enhance a country's energy security. Biofuel offers an attractive source of energy for the substitution of fossil fuels, and looking at the huge demand for diesel in all sectors of the economy, the biodiesel is being viewed as the best substitute for diesel. The other advantage for biofuel promotion in India is climate change mitigation through reduced greenhouse gas (GHG) emission. This article provides the current status of biodiesel development in India and discusses the role played by thecentre and state government in promoting second-generation feedstock (nonedible seeds) and third-generation feedstock (algae) for biodiesel production.