India's ethanol capacity can boost SAF production, but policy gaps a hurdle: AIDA's Bharati Balaji | HT interview

All India Distillers' Association (AIDA) deputy director general Bharati Balaji says that India's existing ethanol capacity could give it a head start in producing sustainable aviation fuel (SAF), but warns of a holdback in investment due to unpredictable feedstock policies and the absence of long-term purchase guarantees.

AIDA's deputy director general Bharati Balaji discusses the changes needed in the proposed SAF policy (X/ PTI File)In an interview with Hindustan Times, Balaji discusses the changes needed in the proposed SAF policy, why producers need 10-15-year offtake agreements, and how the country's ethanol industry can help meet its aviation fuel targets.

India's proposed blending trajectory, from 1% in 2027 to 5% by 2030, and the decision to count only domestically produced SAF are positive steps. But targets alone will not bring investment. The industry needs four things: a long-term blending mandate, incentives for early investors, assured procurement and internationally recognised certification.

An alcohol-to-jet (ATJ) plant is a 15-20-year investment. Investors cannot make such commitments based on a five-year mandate. The blending trajectory beyond 2030 must be notified, rather than remain indicative. Domestic flights should also be brought under the mandate through a clearly published timeline.

The policy should be feedstock-neutral, with eligibility determined by lifecycle emissions. Ethanol made from molasses, sugarcane juice and syrup, maize, surplus Food Corporation of India rice, damaged grains and agricultural residues should qualify if they meet the required carbon-intensity threshold.

The incentives proposed in the draft policy, including GST relief, import duty waivers, income-tax holidays, accelerated depreciation, viability gap funding and green finance, are a good starting point. We would also like an interest subvention scheme, similar to the one that helped expand India's ethanol capacity, and capital support for distilleries that integrate or co-locate ATJ units.

Equally important is assured procurement. The Ethanol Blending Programme succeeded because oil marketing companies (OMCs) offered assured procurement at administered prices linked to feedstock. SAF needs a similar model, with 10-15-year offtake contracts, a published pricing formula for SAF and the ethanol supplied to ATJ plants, and a mechanism to bridge the difference between SAF production costs and conventional aviation turbine fuel (ATF) prices.

Feedstock availability is not the biggest challenge. Policy certainty is. India has around 2,200 crore litres of installed ethanol capacity a year, of which roughly 1,300 crore litres is grain-based. Against this, the requirement for the E20 programme is about 1,000-1,100 crore litres.

Even if a 5% SAF blend were applied to all of India's projected 14.2 million tonnes of ATF consumption in 2030, the ethanol requirement would be around 160-200 crore litres, less than a tenth of the country's installed capacity.

The problem is access to feedstock. For the 2026-27 ethanol supply year, sugarcane juice and B-heavy molasses cannot be used for ethanol production. FCI rice allocations are capped quarter by quarter, while maize prices have risen to around ₹27 per kg from ₹17-18 a year ago.

A SAF plant designed to operate for two decades cannot be financed based on feedstock rules that change with the seasons. Alcohol-to-jet is an established and internationally certified pathway. Indian companies have moved beyond pilot projects towards commercial investments.

Praj has demonstrated an integrated ethanol-to-jet process, IndianOil is developing an ATJ unit at Panipat, and GPS Renewables has begun building an ethanol-to-jet plant in Andhra Pradesh. However, commercial-scale SAF production in India is realistically a 2029-30 prospect.

Ethanol is the largest cost component in the ATJ pathway, with nearly two litres of ethanol required to produce one litre of SAF. Cheaper feedstock alone will not close the cost gap. We need economies of scale, lower-cost financing, recognition of verified emissions reductions and a transparent mechanism to share the SAF premium across the value chain.