In the present work, CNSL (cashew nut shell liquid), a byproduct of cashew industry, has been considered as an economically viable alternate source for producing biodiesel. Further, the feasibility and economic viability of using CNSLME (cashew nut shell liquid methyl ester or CNSL biodiesel) directly in a diesel engine has been analyzed. CNSL is trans-esterified in double stages due to its high free fatty acid content and instead of using produced CNSLME in blend with diesel; it was directly used in a single cylinder diesel engine by preheating it. By this measure, the higher viscosity of biodiesel is reduced and the experimental investigation tends to show that both the performance and emission of preheated CNSLME has been improved. At an inlet fuel temperature of 80 degrees C, the CNSLME discerns a 20% increase in BTE (brake thermal efficiency), 66% and 52% decrease in CO and HC emission, respectively, than unheated CNSLME. To purport the economic viability of CNSL, a detailed economic analysis has been conducted. From the analysis, it is inferred that CNSL is a low cost feedstock for biodiesel production among the other existing edible and non-edible oils considered so far.