India is preparing to mandate a 1% blending of Sustainable Aviation Fuel (SAF) in aviation turbine fuel (ATF) from January 2027, senior officials from state-run oil marketing companies announced at a conference on Saturday. The impact on airfares would be minimal, approximately Rs 100-200 per ticket, according to a scientist.
Government Policy and Targets
In April, the Indian government formally recognised SAF as fuel through a gazette notification. It outlined phase-wise indicative targets such as 1% blending by 2027, 2% by 2028, and 5% by 2030. These were not mandates initially. “The government is in the process of formulating a SAF policy and as part of that policy, it is expected that actual mandates will be brought in. We are expecting a 1% blending mandate from January 1, 2027,” said Shailesh Dhar, executive director and country head (aviation), Indian Oil Corporation (IOCL). He was speaking at a conference organised by the Aeronautical Society of India on Saturday.
“Since the blending targets are small, it will add about Rs 100-200 to the cost of the ticket,” said Saleem Farooqui, senior principal scientist, CSIR-Indian Institute of Petroleum.
Production Plans by PSUs
IOCL is set to begin SAF production from used cooking oil (UCO) at its Panipat refinery by September, ahead of the January 2027 deadline. Bharat Petroleum (BPCL) is commissioning a co-processing unit at its Mumbai refinery with a capacity of 60,000 tonnes per annum by the end of 2026, said Sanjeev Kumar, executive director, BPCL.
Dhar said the PSUs have an estimation of India’s near-term demand-supply for SAF. “In 2027, India will need 62,000 tonnes of SAF and by 2028 it will be 130,000 tonnes and by 2030 it will be about 380,000 tonnes,” he added, stating that the PSUs are on track to meet this requirement.
India's Advantages and Challenges
Mathew Sibi T, executive director (aviation), Hindustan Petroleum Corporation Ltd, said India has certain advantages when compared to other countries regarding SAF production. “Firstly, we have diverse feedstock, second is we have good refineries where we can co-process SAF, we also have good technically good capabilities.”
The PSUs have jointly requested the government for viability gap funding and rebates in tax or excise duty for the initial period so that the burden is not solely shared by airlines; SAF currently costs 3-5 times that of ATF. The US offers SAF producers a $1.75 per gallon tax credit under Section 45Z, while the UK guarantees a fixed strike price for 15 years. A combination of funding mechanisms, rather than any single instrument, is being discussed with the government, said Sibi.
Global Context and Urgency
Currently, the EU, UK, Canada, and Singapore have SAF blending mandates. The urgency around SAF is being driven in large part by CORSIA (Carbon Offsetting and Reduction Scheme for International Aviation), the UN’s framework for managing aviation emissions. From January 2027, airlines of participating countries, including India, have to offset carbon emissions from international flights that exceed 85% of their 2019 levels.
SAF is a renewable fuel derived from alternative feedstocks such as used cooking oil, crops, biogenic residues, and waste materials. SAF lifecycle emissions are about 80% lower than conventional fossil fuel-derived ATF. Flying on SAF-blended fuel significantly reduces the volume of emissions an airline must offset.
