India draft SAF policy prices alternative fuel at 2-3 times jet fuel

India's government estimates sustainable aviation fuel (SAF, jet fuel made from non-petroleum feedstocks) will cost at least two to three times as much as conventional aviation turbine fuel (ATF), according to a draft national policy that proposes financial incentives to build domestic production capacity.

The draft sets a phased blending mandate for international aviation. Fuel suppliers must ensure a 1% SAF blend in 2027, 2% in 2028, 3% in 2029 and 5% in 2030. Longer-term figures, including 20% by 2040, remain indicative. The National Council on SAF will decide which of those targets become mandatory, weighing supply-chain readiness, technology and market conditions.

The mandate would apply initially to international flights covered by the International Civil Aviation Organization's CORSIA framework (the UN body's carbon-offsetting scheme for international aviation), with suppliers required to blend SAF into ATF before delivery. Only SAF manufactured in India would qualify, according to the draft.

What does this change for fuel suppliers and airlines? Suppliers carry the blending obligation, not carriers, and the domestic-manufacturing requirement forces investment in local production rather than imports of cheaper foreign product.

The policy documents the environmental case in a single figure. SAF can cut lifecycle carbon dioxide emissions by up to 80% compared with conventional jet fuel, the draft states. That claim aligns with the US Department of Energy's definition of SAF as an alternative fuel from non-petroleum feedstocks that reduces air pollution from air transportation.

What fiscal support is on offer?

The government may extend financial incentives to promote SAF production, the draft said. Proposed measures include:

• Exemption or reduction in goods and services tax (GST)
• Import duty waivers
• Income-tax holidays
• Accelerated depreciation
• Support through existing or new schemes, green bonds and tax concessions

Each measure remains subject to consideration by the relevant ministries and departments. No rupee value has been attached to the production incentives.

India's feedstock base is substantial. The draft cites an estimated 230 million tonnes of surplus agricultural residue that could produce the fuel, alongside used cooking oil and ethanol.

How would compliance be tracked?

A digital National SAF Registry, maintained by the Directorate General of Civil Aviation (DGCA), India's aviation regulator, would track production, blending and transactions. Each transaction would carry a digitally secured certificate recording the fuel batch, feedstock origin, producer and emissions reduction.

Blending would occur at a production facility, refinery or intermediate storage point before supply to airports, the draft said. That placement limits airport-side infrastructure investment but concentrates logistics at refining assets.

The policy also proposes an SAF Innovation Seed Fund of roughly ₹500 crore (about $60 million) to support research and development, administered through the Centre for High Technology, which operates under the petroleum ministry.

What remains undecided?

Nothing in the draft is final. The National Council on SAF must confirm which indicative targets become binding, and ministries must approve each fiscal measure before it takes effect. The cost premium of two to three times conventional ATF will determine whether the 2027 start date is credible, given that no commercial-scale SAF plant in India is currently positioned to meet a 1% blend across international departures.

The policy now moves through inter-ministerial review, with the first mandatory milestone set for 2027 if the council confirms the schedule.