India Explores Ethanol-Based Aviation Fuel, Opening New Opportunities for SAF Manufacturing

August 10, 2026

In August 2026, Union Civil Aviation Minister K Ram Mohan Naidu publicly clarified that the government has no proposal to blend raw ethanol directly into Aviation Turbine Fuel (ATF), pushing back on political claims that had drawn a comparison to the E20 petrol rollout. The clarification was necessary precisely because India's actual aviation fuel policy shift, formalised months earlier, is genuinely significant and easily misrepresented.

In April 2026, the Ministry of Petroleum and Natural Gas amended the specifications governing ATF, expanding its legal definition beyond conventional hydrocarbon fuel under IS 1571 to permit blending with synthetic hydrocarbons certified under IS 17081, the standard covering Sustainable Aviation Fuel produced through the Alcohol-to-Jet (ATJ) pathway.

In effect, India opened a regulatory pathway for ethanol to become jet fuel, not by pouring ethanol into aircraft tanks, but by converting it into certified SAF molecules first. For India's biofuel and refining sectors, this marks an important shift for ethanol-based aviation fuel from industry discussion toward a more active policy and investment track, with direct implications for SAF manufacturing capacity the country does not yet have at commercial scale.

What is Ethanol-Based Aviation Fuel?

Ethanol-based aviation fuel refers to Sustainable Aviation Fuel produced through the Alcohol-to-Jet pathway, in which ethanol, whether derived from sugarcane molasses, grain, or agricultural residue, is chemically converted into jet-range hydrocarbons that meet ASTM D7566 Annex A5 international certification. The resulting SAF is then blended with conventional ATF, not substituted for its wholesale; current global certification permits blends of up to 50%.

This distinction matters for exactly the reason the aviation minister felt compelled to clarify it: ethanol itself never enters an aircraft's fuel tank. What enters the tank is a certified, tested hydrocarbon blend that happens to have started its chemical life as ethanol, produced in a dedicated SAF manufacturing facility rather than a conventional ethanol distillery.

How is Ethanol Used to Produce Sustainable Aviation Fuel (SAF)?

The ATJ process takes ethanol through a multi-stage conversion: dehydration to ethylene, oligomerization to build longer hydrocarbon chains, and hydrogenation to produce a stable, jet-range fuel that can be blended into ATF and meet the same performance and safety specifications as conventional aviation fuel.

This is one of several certified SAF production pathways alongside HEFA (Hydroprocessed Esters and Fatty Acids, using used cooking oil or tallow) and Fischer-Tropsch synthesis, but ATJ could be particularly relevant for India given the country's established ethanol production base built up over a decade of road-transport blending mandates.

Industry technology providers including Honeywell, and Praj Industries, have already commercialized ATJ conversion technology, meaning the chemistry itself is proven; what India needs to build is the manufacturing capacity to run it at scale domestically.

Why is India Exploring Ethanol-Based Aviation Fuel?

Two forces are converging to make ethanol-based aviation fuel commercially logical for India right now. First, India's ethanol production capacity, built to meet the E20 petrol blending programme, is running structurally ahead of road-fuel demand, creating a surplus that SAF production could absorb as a new offtake market, a point Road Transport and Highways Minister Nitin Gadkari made explicitly at the Sugar, Ethanol and Bioenergy conference in Mumbai in June 2026, stating that ethanol-based aviation fuel would be “economically viable” and would reduce the country's dependence on imported aviation fuel.

Second, international pressure is real and time-bound: ICAO's CORSIA Phase II emissions offset obligations become mandatory for international flights in 2027, and the European Union's ReFuelEU Aviation regulation already mandates SAF blending on flights departing EU airports, a requirement Indian carriers operating European routes must meet regardless of domestic policy timelines. India has set its own indicative blending trajectory of 1% SAF on international flights by 2027, rising to 2% by 2028 and 5% by 2030, translating into domestic SAF demand rising from an estimated 62 kilotonnes in 2027 to roughly 380 kilotonnes by 2030.

What Does This Mean for India's Biofuel Industry?

For India's ethanol producers, the April 2026 ATF policy change represents the first genuine second market for a production base that has, until now, sold almost exclusively into road-fuel blending. India's estimated surplus of 230 million tonnes of agricultural residue, identified by Deloitte as a critical future feedstock for second-generation ethanol production, positions the biofuel industry to serve aviation decarbonisation without displacing existing food or fuel-crop supply chains if second-generation pathways scale as intended.

The government has also created a Civil Aviation Sustainability Cell within the Ministry to oversee SAF production, certification, and lifecycle carbon accounting, signalling that this is being treated as a distinct, dedicated regulatory track rather than an extension of existing ethanol policy.

How Could This Influence SAF Manufacturing Investments?

Commercial investment activity is already responding to the policy signal. TruAlt Bioenergy has formalised a partnership with Honeywell to deploy ethanol-to-jet technology at a proposed SAF facility in Andhra Pradesh, designed to produce approximately 80,000 tonnes of SAF annually using molasses-based ethanol, biomass cogeneration, and gasification-derived hydrogen, an integrated approach aimed at compressing the cost premium SAF currently carries over conventional jet fuel.

On the certification side, Indian Oil's Panipat refinery received India's first SAF certification in December 2025, with BPCL's Mumbai refinery following in 2026 under ISCC CORSIA standards, giving the country its first commercially certified domestic SAF supply points even as ATJ-specific capacity remains nascent.

The scale of the longer-term opportunity is substantial: Deloitte's analysis projects India could produce 8-10 million tonnes of SAF annually by FY2040, requiring cumulative investment of INR 6-7 lakh crore (approximately USD 70-85 billion), creating 1.1-1.4 million jobs across the value chain, and cutting the country's crude oil import bill by an estimated USD 5-7 billion annually, figures that position SAF manufacturing as a genuinely large-scale industrial opportunity rather than a niche decarbonisation project.

What Infrastructure is Required for SAF Manufacturing?

A commercial-scale SAF manufacturing facility built around the ATJ pathway requires substantially more than a conventional ethanol distillery retrofitted for a new product. It needs dedicated ethylene dehydration and oligomerization process units, hydrogenation infrastructure with a reliable hydrogen supply, fractionation and blending systems capable of producing ASTM D7566-certified output, and the storage, quality testing, and lifecycle carbon-accounting infrastructure required for CORSIA and ISCC certification.

Public-sector oil marketing companies, principally IOCL and BPCL, have separately been directed to commission at least one HEFA-route SAF unit by 2028 using used cooking oil and tallow feedstock, a parallel pathway requiring its own distinct process infrastructure, feedstock aggregation logistics, and quality control systems.

How Can Engineering Consultants Support SAF Manufacturing Projects?

Converting India's policy opening and early commercial announcements into operating SAF capacity depends on engineering discipline that neither the regulatory change nor the technology licence alone provides. Feasibility studies need to evaluate ATJ versus HEFA versus emerging e-fuel pathways against a specific project's feedstock access, hydrogen availability, and target certification standard, since each pathway carries a materially different capital cost and process footprint.

Technology evaluation and licensor selection should be matched to feedstock characteristics, process requirements, target output specifications, project economics, and certification requirements rather than approached generically. Engineering design must integrate process units, utilities, and the specialised testing and lifecycle carbon-accounting systems SAF certification requires, from the earliest design stage rather than retrofitted later.

And regulatory planning has to be sequenced against the Civil Aviation Sustainability Cell's evolving certification framework, CORSIA Sustainability Criteria, and ISCC requirements simultaneously, since a facility built without reference to certification pathways risks producing fuel that cannot actually be sold as compliant SAF.

India has spent a decade building an ethanol industry to fuel road transport. The next opportunity is developing bio-refineries capable of converting that ethanol into certified sustainable aviation fuel—and success will depend on the engineering, infrastructure, technology, and project execution required to produce SAF reliably and at commercial scale.

IMARC Engineering’s Perspective

India's April 2026 ATF policy amendment, and the commercial momentum already visible in projects like TruAlt Bioenergy's Andhra Pradesh facility, mark the genuine start of a domestic SAF manufacturing industry. At IMARC Engineering, we see this as a sector where the technical and regulatory complexity is high enough that engineering planning will determine which projects reach commercial operation.

We support developers evaluating SAF manufacturing facilities with feasibility studies comparing ATJ, HEFA, and other certified pathways against specific feedstock and market conditions, technology evaluation and licensor selection, engineering design for process, utility, and certification infrastructure, and regulatory planning aligned with CORSIA and ISCC requirements, alongside full project execution through commissioning.

As India works to convert its ethanol surplus and agricultural residue base into a scaled aviation decarbonisation industry, the developers who pair early market positioning with rigorous engineering execution will be the ones who actually deliver certified SAF at the volumes India's 2030 blending targets require.