The Indian aviation sector is on a high-velocity ascent, currently consuming over 9 billion liters of Aviation Turbine Fuel (ATF) annually. As the world’s third-largest domestic aviation market, India faces a critical crossroad: decarbonize or lag behind global standards. In a landmark move, the Government of India has officially announced a 1% SAF blending mandate by 2027, escalating to 2% by 2028 and 5% by 2030.
This mandate isn’t just a regulatory hurdle; it’s a ₹5,000+ crore first-mover opportunity for entrepreneurs. With a projected demand of nearly 140–180 million liters of SAF by 2028, the gap between current production and mandatory requirements is vast. For investors, this represents a rare “guaranteed-offtake” scenario backed by national policy and global net-zero commitments.
Understanding India’s SAF Mandate & Market Potential
Government Policy Framework
The Ministry of Petroleum & Natural Gas (MoPNG) and the Ministry of Civil Aviation have laid out a clear roadmap to ensure India meets its CORSIA (Carbon Offsetting and Reduction Scheme for International Aviation) obligations.
- 1% Mandate (2027): Initially targeting international flights, requiring ~140 million liters.
- 2% Mandate (2028): Stepping up the requirement as domestic production capacity matures.
- PLI & Incentives: While a dedicated SAF PLI is under discussion, producers can currently leverage the PM JI-VAN Yojana, which provides financial support for “Second Generation” (2G) ethanol and advanced biofuel projects, including SAF.
- Regulatory Penalties: Under CORSIA and upcoming domestic frameworks, non-compliance will lead to carbon credit purchase requirements or financial penalties, making SAF an operational necessity for airlines.
Market Size Calculation
India’s transition to green skies is backed by staggering numbers:
- Current ATF Consumption: ~8.5–9 Million Metric Tonnes (MMT) annually.
- SAF Demand (2027-28): Calculated at 1% of total consumption, India needs approximately 90,000 to 140,000 tonnes (110–180 million liters) of SAF annually.
Revenue Potential: At a conservative price of $2.20 per liter (roughly 2.5x conventional ATF), the market for the 1% mandate alone is valued at approximately ₹2,800–₹3,200 Crores annually.
SAF Production Technologies Suitable for India
HEFA (Hydroprocessed Esters and Fatty Acids)
The most commercially mature pathway globally and in India.
- Process: Converting lipids (fats/oils) into hydrocarbons through hydro-treatment.
- Feedstock: Used Cooking Oil (UCO), tallow, and non-edible oils like Jatropha or Karanja.
- Investment: A 30,000-tonne-per-annum (KTPA) plant typically requires an investment of ₹800–₹1,000 Crores.
- Authority: Meets ASTM D7566 Annex A2 standards.
Alcohol-to-Jet (AtJ) Pathway
Ideally suited for India due to the nation’s massive ethanol surplus and 20% ethanol-blending success.
- Integration: Can be co-located with existing sugar mills or large-scale distilleries.
- Status: IOCL is already setting up an 86,800-tonne AtJ plant in Panipat using LanzaJet technology, scheduled for 2028.
CSIR-IIP Homegrown Technology
The Indian Institute of Petroleum (CSIR-IIP) has developed a patented single-step HEFA process.
- Advantage: Produced SAF is roughly 1.5x the cost of conventional ATF, significantly lower than the global 2-3x premium.
- Success Story: Powering test flights for SpiceJet and the Indian Air Force using Jatropha-derived fuel.
Step-by-Step SAF Business Setup in India
1. Pre-Feasibility & Site Selection
- Feedstock Mapping: Secure a “catchment area” for UCO or agricultural residue. Proximity to a major airport or refinery is vital to minimize logistics costs.
- Land: Typically requires 15–25 acres for a 50 KL/day commercial facility.
2. Regulatory Approvals
- Clearances: Environmental Clearance (MoEFCC), State Pollution Control Board (NOC), and PESO licenses for fuel storage.
- Certification: Must obtain ISCC CORSIA certification (like IOCL Panipat) to sell fuel to international carriers.
3. Investment Calculator (Estimated)
Capacity (per day) | Technology | Estimated CAPEX | Expected Payback |
10 KL (Pilot) | HEFA | ₹60–₹80 Crores | 8–10 Years |
50 KL (SME) | HEFA / AtJ | ₹350–₹450 Crores | 6–8 Years |
100+ KL (Industrial) | AtJ / FT | ₹1,000+ Crores | 5–7 Years |
Feedstock Strategy: The Competitive Moat
The biggest risk in SAF is the supply chain. Successful producers will focus on:
- UCO Sourcing: Partnering with FSSAI’s RUCO (Repurpose Used Cooking Oil) initiative to aggregate oil from restaurants and hotels.
- Agri-Residue: Utilizing India’s 230 MMT surplus of rice straw and corn stover.
- Non-Edible Oils: Contract farming of Karanja on wasteland to ensure price stability.
Challenges & Risk Mitigation
- Cost Gap: SAF is currently expensive. Mitigation: Leverage Carbon Credits (CORSIA) and the “Green Premium” paid by corporate travelers via airline sustainability programs.
- Feedstock Competition: Biodiesel also competes for UCO. Mitigation: Diversify technology to handle multi-feedstock inputs (HEFA + AtJ).
Investment Thesis: Why Now?
India is entering a “Mandate-Driven Bull Run” for green fuels. With the 2027 deadline approaching, the first few commercial plants will enjoy 100% offtake security, premium pricing, and the ability to define the market’s supply chain.
Ready to lead the green aviation revolution?
Contact our Biofuel Specialists to request a detailed Project Report.
