India is preparing to mandate a 1% blending of Sustainable Aviation Fuel (SAF) in aviation turbine fuel (ATF) from January 2027, according to senior officials from state-run oil marketing companies who spoke at a conference on Saturday. The impact on airfares would be minimal, roughly Rs 100-200 per ticket, said a scientist.
What is SAF?
SAF is a renewable fuel derived from alternative feedstocks such as used cooking oil, crops, biogenic residues, and waste materials. In April, the Indian government formally recognized SAF as fuel for aircraft operations through a gazette notification, outlining phase-wise indicative targets: 1% blending by 2027, 2% by 2028, and 5% by 2030. These were not mandates but indicative targets.
Government Policy and Mandates
“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’re expecting a 1% blending mandate from January 1, 2027,” said Shailesh Dhar, executive director and country head (aviation), Indian Oil Corporation (IOCL), speaking at a conference organized by the Aeronautical Society of India.
“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
IOCL is set to begin SAF production from used cooking oil 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 PSUs have an estimation of India’s near-term demand-supply for SAF. “In 2027, India will need 62,000 tonnes of SAF; by 2028, it will be 1.3 lakh tonnes; and by 2030, it will be about 3.8 lakh tonnes,” he said, adding that PSUs were on track to meet this requirement.
India's Advantages
Mathew Sibi T, executive director (aviation) of Hindustan Petroleum Corporation Ltd, said India has certain advantages compared to other countries when it comes to SAF production. “Firstly, we have diverse feedstock; secondly, we have good refineries where we can co-process SAF; and also have technically good capabilities.”
Financial Support and Global Context
PSUs have jointly requested the government for viability gap funding and rebates in tax or excise duty for the initial period. 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.
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 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.
