Centre’s Draft SAF Policy Proposes 90% Local Fuel Uplift for International Airlines

The Centre has introduced a draft National Sustainable Aviation Fuel (SAF) policy aimed at establishing demand certainty for sustainable aviation fuel within the country. The proposal mandates that both Indian and foreign airlines operating scheduled international services buy at least 90 percent of their annual fuel requirements for flights departing from India at domestic airports.

This requirement covers trip and taxi fuel, though it excludes contingency, alternate reserve, and additional fuel. According to the draft, the objective is to discourage "economic tankering," a practice where carriers carry additional fuel purchased elsewhere to minimize refuelling at Indian airports. Domestic operations of Indian carriers are excluded from this proposed fuel-uplift obligation.

To support the development of a domestic SAF ecosystem, the draft policy outlines several financial and fiscal support measures. These include viability gap funding for initial production plants, green financing, long-term offtake agreements, GST relief, import duty waivers, income-tax holidays, and accelerated depreciation. The final financial outlay for these measures will be determined by the petroleum ministry in coordination with the civil aviation ministry.

The policy framework also introduces mandatory SAF blending shares for international aviation under the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). The proposed blending trajectory starts at 1 percent in 2027, increasing to 2 percent in 2028, 3 percent in 2029, and 5 percent in 2030. Indicative subsequent targets include 10 percent in 2035 and 20 percent in 2040, which remain subject to further reviews based on supply readiness, technology, and market conditions.

Additionally, the draft stipulates that only domestically manufactured SAF may be used to meet these blending obligations. To monitor compliance, airlines will be required to submit independently verified annual reports on actual fuel uplift at each airport to the Directorate General of Civil Aviation (DGCA). Unjustified deviations could attract penalties under rules to be developed by the civil aviation ministry and the petroleum ministry.

The framework further provides for a national SAF registry under the DGCA to track transactions and verify emissions-reduction claims. A purchase-based claims mechanism will allow the environmental benefits of SAF to be traded separately from the physical fuel, subject to strict documentation and verification.

Exemptions from the policy provisions apply to humanitarian, medical, and emergency flights, while certain non-scheduled international services, ferry, positioning, or maintenance flights may receive exemptions or reduced requirements. Operational difficulties, safety requirements, and supply constraints will also be factored into compliance assessments.

"The draft National Sustainable Aviation Fuel policy marks a significant regulatory step for the aviation sector in India. By mandating a 90 percent local fuel uplift for international flights and outlining a clear blending trajectory up to 2030, the policy creates predictable domestic demand for green energy producers. For businesses and startups entering the SAF value chain, targeted financial support measures like viability gap funding and green financing offer a clearer path for early-stage deployment. However, successful execution will depend on balancing supply readiness with operational compliance for carriers." — Dr. Shishir Gupta, Founder & CEO, StartupLanes