Sustainable aviation fuel (SAF) could cost at least two to three times as much as conventional jet fuel, according to a draft policy by the Centre, which proposes financial incentives to encourage its production as India prepares to introduce blending mandates for airlines.
Sustainable aviation fuel (SAF) is an alternative fuel made from non-petroleum feedstocks that reduces air pollution from air transportation, according to the US Department of Energy.
The proposed mandate will initially apply to international flights covered under the International Civil Aviation Organization’s (ICAO) CORSIA framework, with fuel suppliers required to blend SAF with ATF. As per the draft, only domestically manufactured SAF will qualify under the policy. The draft also seeks to build a domestic supply chain, stating that SAF used to meet the blending requirements must be manufactured in India.
To support research and development in the sector, the policy also proposes an SAF Innovation Seed Fund of about ₹ 500 crore under the Centre for High Technology, which functions under the petroleum ministry.
The government may consider extending financial incentives and support measures to promote SAF production, according to the draft. These could include support through existing or new schemes, green bonds and tax concessions, it said. The proposed fiscal measures include exemption or reduction in goods and services tax (GST), import duty waivers, income-tax holidays and accelerated depreciation, subject to consideration by the relevant ministries and departments, the draft said. The fuel would be blended with conventional ATF at a production facility, refinery or intermediate storage point before being supplied to airports, it said.
