Akasa Air and Bharat Petroleum Corporation Ltd (BPCL) signed a Memorandum of Understanding on July 14, 2026 to collaborate on the development and adoption of Sustainable Aviation Fuel (SAF) in India. The partnership establishes a framework for the supply and offtake of SAF-blended aviation turbine fuel (ATF) at designated airports across the country. This agreement comes at a time when India is preparing to introduce mandatory SAF blending for international flights starting 2027, making early fuel partnerships critical for the aviation sector’s decarbonisation roadmap.
What Is Sustainable Aviation Fuel?
Sustainable Aviation Fuel (SAF) is a low-carbon alternative to conventional jet fuel produced from renewable feedstocks rather than fossil fuels. These feedstocks include used cooking oil, agricultural residues, biomass, municipal solid waste, and non-food crops. Unlike traditional ATF, which is derived from crude oil, SAF can reduce lifecycle greenhouse gas emissions by 60 to 90 percent compared to conventional jet fuel.
SAF is a drop-in fuel, meaning it is chemically compatible with existing aircraft engines and airport fuelling infrastructure and requires no modifications to either. It can be blended with conventional ATF at varying concentrations, typically between 10 and 50 percent depending on the feedstock and production method used.
Several technology pathways exist for producing SAF. The most established is the HEFA (Hydroprocessed Esters and Fatty Acids) route, which uses oils and fats as feedstock. The Alcohol-to-Jet (ATJ) pathway converts ethanol into aviation fuel, leveraging India’s growing ethanol production capacity. Co-processing involves blending approved bio-feedstocks directly into existing refinery streams at low percentages, offering a faster and less capital-intensive route to SAF production. More advanced pathways such as Fischer-Tropsch (FT) and Power-and-Biomass-to-Liquids (PBtL) combine biomass gasification with green hydrogen to produce fuel with even lower carbon intensity.
The Akasa Air-BPCL Partnership
The MoU was signed by Sujit Kumar, Chief General Manager (Marketing-Aviation) of BPCL, and Ankur Goel, Chief Financial Officer of Akasa Air, in the presence of Subhankar Sen, Director (Marketing) of BPCL, and Sanjeev Kumar, Business Head (Aviation) of BPCL, along with senior officials from both organisations.
Under the agreement, the two companies will establish a framework for the supply and offtake of SAF-blended ATF at selected airports across India. The partnership goes beyond a simple supply arrangement. It includes sharing of indicative demand forecasts by Akasa Air to help BPCL plan production volumes, support for long-term supply readiness, and a phased increase in SAF blending as India’s domestic production ecosystem matures.
Both organisations will also jointly engage in policy advocacy, knowledge sharing, and consultation with government bodies and industry stakeholders to accelerate the growth of India’s SAF ecosystem. This collaborative approach is intended to address the structural challenges that have so far limited SAF adoption in the country, including high costs, limited domestic production capacity, and the absence of a mature feedstock supply chain.
The partnership aligns with global aviation sustainability frameworks, particularly the International Civil Aviation Organization’s (ICAO) Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). From January 2027, Indian carriers operating international routes will be required to comply with the mandatory phase of CORSIA, making early SAF tie-ups a strategic necessity for airlines expanding overseas.
BPCL’s SAF Production Plans
BPCL has been investing in SAF production capacity as part of its broader energy transition strategy. The company is setting up a 61 kilotonnes per annum (KTPA) SAF production facility at its Mumbai Refinery, which is expected to be commissioned by the end of 2026. BPCL plans to develop additional SAF units across its three refineries in Mumbai, Kochi, and Bina, with a total planned investment of around ₹1,400 crore.
In May 2026, BPCL’s Mumbai Refinery received the ISCC CORSIA certification, making it one of the first Indian refineries certified to produce SAF that meets international sustainability standards. This certification, awarded by M/s Cotecna, covers SAF produced through used cooking oil co-processing, and positions BPCL to supply CORSIA-compliant fuel to international airlines.
Akasa Air’s Sustainability Strategy
Akasa Air, which began commercial operations in August 2022, has positioned itself as India’s greenest airline. The carrier operates an all-Boeing 737 MAX fleet equipped with CFM LEAP-1B engines, which consume about 20 percent less fuel and produce correspondingly lower emissions compared to older generation aircraft. The airline has placed a firm order for 226 Boeing 737 MAX aircraft, reinforcing its commitment to fleet modernisation.
Beyond fleet choice, Akasa Air has implemented a range of sustainability measures. It has partnered with OpenAirlines to deploy the SkyBreathe 360-degree eco-flying platform, an AI-powered fuel management system that can reduce fuel consumption by up to 5 percent without aircraft modifications. The airline was the first Indian carrier to voluntarily discontinue ceremonial water cannon salutes at route inaugurations, saving more than 5.3 lakh litres of water to date. It has also adopted electric vehicles for ground operations, introduced recyclable and biodegradable materials in onboard products, and partnered with eNamo for structured e-waste recycling.
This is not Akasa Air’s first SAF-related engagement. The airline had earlier signed a Memorandum of Understanding with HPCL and a Letter of Intent with Indian Oil Corporation (IOC) to explore SAF supply opportunities, reflecting a multi-pronged approach to securing access to sustainable fuel as commercial availability improves.
India’s SAF Policy and Blending Mandates
The Indian government has taken significant regulatory steps in 2026 to create an enabling framework for SAF adoption. In April 2026, the Ministry of Petroleum and Natural Gas amended the Aviation Turbine Fuel (Regulation of Marketing) Order, 2001 through a formal notification on April 17. The amendment redefined ATF as a “mix of hydrocarbons that can also include synthesised components,” thereby legally permitting the blending of SAF with conventional jet fuel.
Alongside this regulatory change, the government announced indicative blending targets for SAF in ATF used for international flights:
| Year | SAF Blending Target |
|---|---|
| 2027 | 1% |
| 2028 | 2% |
| 2030 | 5% |
These targets align with ICAO’s CORSIA framework, which enters its mandatory phase for international aviation emissions from January 2027. India, as a member of ICAO, is expected to comply with these requirements, and the blending mandates provide a domestic regulatory pathway for doing so.
The amendment to the ATF Control Order and the blending targets together provide the regulatory certainty needed for oil marketing companies and airlines to invest in SAF production and offtake arrangements. Before this, the absence of a legal framework for SAF handling and distribution was a significant barrier to adoption.
India’s Competitive Advantage in SAF
India possesses several structural advantages that could position it as a global SAF hub. A June 2026 study found that India can produce SAF at costs up to 40 percent lower than global benchmarks. This cost advantage comes from the combination of abundant agricultural residue and some of the world’s lowest-cost solar-powered green hydrogen.
India generates an estimated 230 million tonnes of surplus agricultural residue annually, much of which is currently burned in fields, contributing to severe air pollution in northern India. Collecting just 4 percent of this residue could produce enough SAF to meet 25 percent of global demand. Using the Power-and-Biomass-to-Liquids pathway, this could translate into export revenues of $9 billion by 2030 and $30 billion by 2040.
India has already demonstrated its ability to scale biofuel production. The country achieved 20 percent ethanol blending in petrol (E20) in 2025, five years ahead of the original 2030 target. The same ethanol production infrastructure can now support the Alcohol-to-Jet pathway for SAF manufacturing.
Why SAF Matters for India
The push for SAF adoption in India is driven by three interconnected priorities: energy security, emissions reduction, and economic opportunity.
India imports more than 85 percent of its crude oil requirements, making the country highly vulnerable to global oil price fluctuations and geopolitical disruptions. Aviation turbine fuel accounts for a significant portion of airlines’ operating costs, and recent global events have demonstrated the risks of this dependence. The development of a domestic SAF industry offers a pathway to reduce this import dependence by substituting fossil-based jet fuel with fuels produced from locally available feedstocks such as agricultural waste and used cooking oil.
On the emissions front, aviation is one of the hardest-to-abate sectors. While the industry contributes about 2 to 3 percent of global CO2 emissions, its share is expected to rise as air traffic grows. India is currently the world’s third-largest domestic aviation market, carrying over 174 million passengers in 2024, and this number is projected to grow significantly in the coming decade. Without a transition to cleaner fuels, the sector’s emissions trajectory will be difficult to alter.
SAF is currently the only viable near-term alternative to fossil jet fuel for long-haul aviation. Electric and hydrogen-powered aircraft remain in early stages of development and are unlikely to be commercially viable for large aircraft or long distances in the foreseeable future. SAF, by contrast, is a proven technology that can be used in existing aircraft without modification.
Challenges to Overcome
Despite its promise, SAF adoption in India faces several hurdles. The most significant is cost. SAF currently costs three to five times more than conventional jet fuel globally, and the gap is wider in India due to fuel taxation. Aviation turbine fuel is outside the unified Goods and Services Tax (GST) framework, and individual states levy their own Value Added Tax (VAT), which has historically been as high as 25 percent in some states. Although Delhi and Maharashtra temporarily reduced VAT to 7 percent earlier in 2026, these cuts are set to expire later in the year, creating uncertainty for long-term fuel contracting.
Feedstock supply is another critical challenge. While India generates large volumes of used cooking oil and agricultural residue, the collection infrastructure remains underdeveloped. The government’s RUCO (Repurposed Used Cooking Oil) programme has captured barely 5,000 tonnes of used cooking oil against a potential of nearly 3 million tonnes generated annually. For agricultural residue, the logistics of aggregating and transporting biomass from millions of small and marginal farms to centralised refineries remain difficult and expensive.
Certification and traceability also pose challenges. For SAF to be sold to international airlines and count toward CORSIA compliance, it must meet rigorous sustainability certification standards. BPCL’s ISCC CORSIA certification for its Mumbai Refinery is a step forward, but scaling certification across the industry will require time and investment.
The Road Ahead
The Akasa Air-BPCL MoU is part of a broader trend of airlines and oil marketing companies in India forging early partnerships ahead of the 2027 blending mandate. Indian Oil Corporation has signed a Letter of Intent with Akasa Air and is planning the country’s first commercial-scale SAF plant at Panipat. Mangalore Refineries and Petrochemicals is setting up a 20 kilolitre per day SAF plant using an indigenous single-step process developed by the CSIR-Indian Institute of Petroleum.
For these partnerships to translate into actual blended fuel flowing through Indian airports, several enabling conditions must be met. A stable and predictable tax framework for SAF is essential to give airlines and producers the confidence to enter long-term offtake agreements. Investment in feedstock collection and aggregation infrastructure, particularly for used cooking oil and agricultural residue, needs to scale rapidly. The government may also need to consider production-linked incentives or tax credits for SAF refiners, similar to support mechanisms available in the United States and Europe.
India has the raw materials, the refining capability, the policy direction, and now the early commercial partnerships to build a viable SAF ecosystem. The challenge lies in connecting these pieces into a functioning supply chain before the international compliance deadlines arrive.
Key Takeaways
- Akasa Air and BPCL signed an MoU on July 14, 2026 to collaborate on Sustainable Aviation Fuel adoption in India, covering supply, demand forecasting, and policy advocacy.
- Sustainable Aviation Fuel (SAF) is a drop-in fuel produced from renewable feedstocks that can reduce lifecycle greenhouse gas emissions by 60 to 90 percent compared to conventional jet fuel.
- India has set indicative SAF blending targets of 1% by 2027, 2% by 2028, and 5% by 2030 for international flights, aligned with ICAO’s CORSIA framework.
- The Ministry of Petroleum and Natural Gas amended the ATF Control Order, 2001 on April 17, 2026 to legally permit the blending of SAF with conventional jet fuel.
- BPCL is building a 61 KTPA SAF production facility at its Mumbai Refinery and received ISCC CORSIA certification in May 2026 for SAF produced through used cooking oil co-processing.
- India can produce SAF at costs 40 percent lower than global benchmarks, with the potential to generate $9 billion in export revenues by 2030 by using surplus agricultural residue and low-cost green hydrogen.
