India's Ethanol Capacity Could Propel SAF Production Amid Policy Gaps

In a recent interview with DotMR, Bharati Balaji, the Deputy Director General of the All India Distillers' Association (AIDA), articulated a compelling vision for India's sustainable aviation fuel (SAF) sector. Balaji emphasized that while India possesses a robust ethanol production capacity, the lack of stable and predictable policies poses significant challenges for attracting investment in SAF production.

India currently boasts an installed ethanol capacity of approximately 2,200 crore liters annually, with around 1,300 crore liters derived from grain sources. This capacity positions India favorably to meet its aviation fuel targets, particularly as the country aims to implement a blending trajectory that escalates from 1% in 2027 to 5% by 2030. Balaji noted that even with a 5% SAF blend applied to the projected 14.2 million tonnes of aviation turbine fuel (ATF) consumption by 2030, the ethanol requirement would only be around 160-200 crore liters, a fraction of the existing capacity.

However, Balaji cautioned that the current policy landscape is fraught with uncertainties. "Feedstock availability is not the biggest challenge. Policy certainty is," he stated, highlighting the need for a long-term blending mandate and assured procurement to stimulate investment in SAF production.

Balaji outlined the necessity for 10-15 year offtake agreements to provide investors with the confidence required to commit to the long-term nature of alcohol-to-jet (ATJ) plants, which typically require a 15-20 year investment horizon. He argued that investors cannot make such commitments based on a mere five-year mandate.

The proposed SAF policy must include a clearly defined blending trajectory beyond 2030, as well as a timeline for integrating domestic flights into the SAF mandate. Additionally,, Balaji stressed that the policy should be feedstock-neutral, allowing various sources of ethanol—such as molasses, sugarcane juice, maize, and agricultural residues—to qualify based on lifecycle emissions.

The draft policy proposes several incentives, including GST relief, import duty waivers, and income-tax holidays, which Balaji views as positive steps. However, he advocates for additional measures such as an interest subvention scheme and capital support for distilleries that integrate ATJ units.

"The Ethanol Blending Programme succeeded because oil marketing companies (OMCs) offered assured procurement at administered prices linked to feedstock. SAF needs a similar model," Balaji explained. He called for a published pricing formula for SAF and the ethanol supplied to ATJ plants, alongside mechanisms to bridge the cost gap between SAF production and conventional ATF prices.

Despite the significant potential for ethanol-derived SAF, Balaji pointed out the current challenges in feedstock availability. For the 2026-27 ethanol supply year, restrictions on sugarcane juice and B-heavy molasses for ethanol production, along with capped allocations of Food Corporation of India (FCI) rice, have created a precarious situation for producers. Additionally, rising maize prices have further complicated the feedstock landscape, increasing from ₹17-18 per kg to around ₹27 per kg over the past year.

Balaji emphasized that a SAF plant designed to operate for two decades cannot be financed based on feedstock rules that change with the seasons.

Despite these challenges, Balaji remains optimistic about the advancements in alcohol-to-jet technology within India. Companies like Praj have successfully demonstrated integrated ethanol-to-jet processes, while IndianOil is developing an ATJ unit in Panipat, and GPS Renewables is constructing an ethanol-to-jet plant in Andhra Pradesh. These developments signal a shift from pilot projects to commercial investments in the SAF sector.

Looking ahead,, while India’s ethanol capacity presents a significant opportunity for boosting SAF production, the path forward is contingent upon establishing a stable and supportive policy framework. As Balaji aptly noted, without addressing these policy gaps, the potential for India to emerge as a leader in sustainable aviation fuel production may remain unrealized.