New Delhi: India plans to introduce mandatory blending of sustainable aviation fuel (SAF) with conventional jet fuel from 2027, starting at 1 percent and progressively increasing the requirement to 40 percent by 2040, under an ambitious draft policy that could significantly reshape the country’s aviation fuel market.
However, the proposed transition raises critical questions over production capacity, fuel costs, feedstock availability and the financial burden on airlines, particularly as the government seeks to make domestically manufactured SAF the sole source for meeting blending obligations.
The Ministry of Civil Aviation has circulated the draft National Policy on Sustainable Aviation Fuels, proposing a phased blending mandate alongside fiscal incentives, financing support and a regulatory framework to encourage domestic production.
Under the proposed framework, mandatory SAF blending would be implemented in two phases.
The first phase, covering 2027–2030, envisages increasing the blending requirement from 1 percent to 5 percent. The second phase, spanning 2031–2040, would progressively raise the mandate to 40 percent.
The draft stipulates that only indigenously manufactured SAF would qualify for blending with Aviation Turbine Fuel (ATF).
India’s annual ATF consumption is projected to increase from approximately 8.2 million tonnes currently to 14.2 million tonnes by 2030, highlighting the scale of the proposed transition.
At the projected 2030 consumption level, a 5 percent blending requirement would translate into approximately 710,000 tonnes of SAF annually, assuming the mandate is calculated by fuel mass.
In a significant proposal, the ministry has sought to prevent economic tankering by requiring Indian and foreign airlines operating international services to uplift at least 90 percent of their annual sector aviation fuel requirement from international airports in India.
Economic tankering refers to airlines carrying additional fuel from airports where it is cheaper to avoid purchasing fuel at more expensive destinations.
The draft’s domestic fuel uplift requirement could support Indian SAF producers and discourage airlines from circumventing blending obligations. However, it could also limit airlines’ flexibility to optimise fuel purchases, potentially increasing operating costs if SAF and conventional jet fuel remain more expensive in India than at competing international aviation hubs.
Importantly, the 90 percent requirement relates to aviation fuel uplifted at Indian airports, not a requirement that 90 percent of an airline’s fuel must be SAF.
The proposed calculation would cover trip and taxi fuel requirements while excluding contingency, alternate reserve and additional fuel approved by the Directorate General of Civil Aviation (DGCA).
The draft estimates that India could produce around 10 million tonnes of SAF annually by 2040, requiring investments of USD 70–85 billion.
That represents a substantial financing challenge for an industry still developing commercial-scale production capabilities.
To encourage investment, the ministry has proposed fiscal measures including GST exemptions or reductions, import duty waivers, income-tax holidays and accelerated depreciation, subject to consideration by the relevant government departments.
Other proposed interventions include viability gap funding, green financing instruments, refinery retrofitting assistance and airport infrastructure development.
However, the draft does not establish how much financial support the government would ultimately provide or how the additional costs of SAF adoption would be distributed among producers, oil marketing companies, airlines and passengers.
The proposed policy identifies agricultural residues, used cooking oil, municipal solid waste, industrial waste streams and renewable fuels of non-biological origin as potential SAF feedstocks.
While India has access to substantial agricultural and waste resources, converting these into commercially viable aviation fuel at scale would require reliable collection systems, processing infrastructure, technology and investment.
Competition for feedstocks from other industries, including biodiesel and bioenergy producers, could further complicate supply availability and pricing.
The government’s proposed 40 percent blending target by 2040 would therefore depend not merely on creating production capacity but also on ensuring sufficient sustainable feedstock supplies at competitive prices.
The ministry has proposed establishing a dedicated SAF Innovation Seed Fund to support pilot projects, indigenous technology development, feedstock optimisation, lifecycle assessment studies and startups working on advanced production technologies.
A National Council on Sustainable Aviation Fuel (NC-SAF) would serve as the apex body for coordinating and overseeing implementation of the policy.
Additionally, a national SAF Registry under the DGCA would record, track and verify SAF transactions, with the objective of ensuring transparency, accountability and compatibility with domestic and international carbon markets.
The framework also envisages sustainability certification and chain-of-custody mechanisms to verify the origin and environmental credentials of SAF.
The proposed policy represents an attempt to build a domestic SAF industry while reducing aviation’s dependence on conventional fossil fuels.
Yet, the transition could prove particularly challenging for India’s price-sensitive aviation market, where fuel already constitutes a major operating expense.
SAF generally costs considerably more than conventional ATF, and mandatory blending without adequate financial support could put additional pressure on airline profitability and passenger fares.
The proposed domestic-only sourcing requirement also raises questions about whether Indian producers can scale up quickly enough to meet mandatory demand without creating supply bottlenecks.
The central policy challenge will be balancing India’s decarbonisation ambitions with the commercial realities of aviation. Unless domestic SAF production becomes sufficiently competitive, the blending mandate risks becoming an additional cost burden rather than a commercially sustainable transition.
For now, the proposals remain part of a draft policy, and their final implementation will depend on government approval, the availability of fiscal support and the readiness of the domestic SAF ecosystem.
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