New Delhi: Airlines in India would have to blend sustainable aviation fuel (SAF) into conventional jet fuel from 2027 under a draft policy circulated by the Ministry of Civil Aviation. The draft National Policy on Sustainable Aviation Fuels set the mandate at 1 percent at the start, and it would rise step-by-step to 40 percent by 2040. Alongside the blending obligation, the ministry proposed fiscal incentives, financing support and a regulatory framework to build up domestic production. If adopted, the proposals could substantially change the country’s aviation fuel market.
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Only SAF made in India would count towards the mandate, according to the draft. That choice puts production capacity, fuel costs, feedstock supply and the financial load on airlines at the centre of the planned transition.
The draft laid out the mandate in two phases. Between 2027 and 2030, the blending requirement would go up from 1 percent to 5 percent. From 2031 to 2040, it would climb progressively to 40 percent. Throughout, only indigenously manufactured SAF would qualify for blending with aviation turbine fuel (ATF).
The size of the shift shows in India’s fuel demand. Annual ATF consumption, now about 8.2 million tonnes, is projected to reach 14.2 million tonnes by 2030. A 5 percent requirement at that level would work out to about 710,000 tonnes of SAF a year, if the mandate is calculated by fuel mass.
By 2040, India could be producing around 10 million tonnes of SAF a year, the draft estimated. Getting there would need investment of USD 70–85 billion. For an industry that is still building commercial-scale production, raising that money is a major hurdle.
The ministry proposed several fiscal measures to attract investment. These include exemptions or cuts in goods and services tax (GST), waivers of import duty, income-tax holidays and accelerated depreciation. All of them remain subject to consideration by the government departments concerned. The draft also listed viability gap funding, green financing instruments, help for refineries to retrofit their units, and development of airport infrastructure.
The draft did not set out how much financial support the government would finally commit. Nor did it settle how the extra cost of using SAF would be shared among producers, oil marketing companies, airlines and passengers.
One of the draft’s key proposals targets economic tankering. In this practice, airlines carry extra fuel from airports where it is cheaper so that they buy less at destinations where it costs more. To stop it, the ministry proposed that Indian and foreign airlines flying international services must uplift at least 90 percent of their annual sector aviation fuel requirement from international airports in India.
The 90 percent figure applies to aviation fuel uplifted at Indian airports. It does not mean that 90 percent of an airline’s fuel has to be SAF. The requirement would be calculated on trip and taxi fuel. Contingency fuel, alternate reserve and any additional fuel approved by the Directorate General of Civil Aviation (DGCA) would be left out.
The uplift rule could help Indian SAF producers and make it harder for airlines to work around their blending obligations. At the same time, it would give airlines less room to shop for cheaper fuel. If SAF and conventional jet fuel stay costlier in India than at competing international hubs, their operating costs could rise.
The ministry proposed a dedicated SAF Innovation Seed Fund. It would back pilot projects, home-grown technology, feedstock optimisation, lifecycle assessment studies and startups working on advanced production technologies.
Implementation would be coordinated and overseen by a National Council on Sustainable Aviation Fuel (NC-SAF), which the draft named as the apex body. A national SAF Registry under the DGCA would record, track and verify SAF transactions. Its purpose would be to ensure transparency and accountability, and to keep Indian SAF compatible with domestic and international carbon markets. The framework also provided for sustainability certification and chain-of-custody mechanisms to verify where SAF comes from and its environmental credentials.
The draft identified agricultural residues, used cooking oil, municipal solid waste, industrial waste streams and renewable fuels of non-biological origin as possible feedstocks. India has large agricultural and waste resources. Turning them into commercially viable jet fuel at scale, however, would need reliable collection systems, processing infrastructure, technology and investment.
Other users want the same feedstocks. Biodiesel and bioenergy producers could compete for them, which may tighten supply and push up prices. Reaching 40 percent by 2040 would therefore require more than new production capacity. It would also depend on securing enough sustainable feedstock at competitive prices.
Through the policy, the government aims to build a domestic SAF industry and cut aviation’s reliance on conventional fossil fuels. The transition could be particularly hard on India’s price-sensitive aviation market, where fuel is already one of the largest operating costs.
SAF typically costs considerably more than conventional ATF. Without adequate financial support, mandatory blending could squeeze airline profits and push up fares. The domestic-only sourcing rule adds another uncertainty, since Indian producers would need to scale up fast enough to meet mandated demand without creating supply bottlenecks.
The main policy challenge will be to balance decarbonisation goals against the commercial realities of aviation. If domestic SAF does not become competitive enough, the mandate could turn into an added cost burden rather than a commercially sustainable transition.
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The proposals are still at the draft stage. Whether they are implemented will depend on government approval, the availability of fiscal support and how ready the domestic SAF ecosystem is.