Biofuels are acquiring importance due to their potential to mitigate greenhouse gas emissions. The two most important biofuels – viz., bioethanol and bio-diesel, are largely considered supplementary to the transport fuels. India has extensive programs and aims to blend 20 percent of transport fuels with biofuels by 2017. This paper focuses on three aspects in the context of biofuel production and policy in India. First, the paper looks at feasibility of meeting the biofuel blending targets envisaged. While jatropha remains as the main feedstock for biodiesel production, sweet sorghum could be considered as alternative feedstock to sugarcane for bioethanol production. Secondly, the paper analyzes the competitiveness of jatropha and sweet sorghum using the cost of cultivation data for a number of crops grown in major states of India during the decade of 2000s. The results suggest that both jatropha and sweet sorghum could pose threat to coarse cereals production. Lastly, the paper critically analyzes the viability of jatropha plantations based on insights from field survey conducted in the Southern state of Tamil Nadu. The paper argues that despite aggressive approach adopted by the Government of India, inadequate attention paid to the institutional issues has resulted in unsatisfactory progress in achieving the bio-diesel blending targets.