Government Explores Funding and Tax Incentives to Accelerate Early Deployment of Sustainable Aviation Fuel (SAF)

The Centre is contemplating a comprehensive package to promote the early adoption of sustainable aviation fuel (SAF) in India. This initiative, as revealed by industry sources, includes potential viability gap funding (VGF) for pioneering production facilities, alongside adjustments to the goods and services tax (GST) and excise duties. It aims to provide significant support as the aviation sector grapples with high production costs, which currently disproportionately impact airlines and fuel producers. This initiative is part of the forthcoming National SAF Policy and market-development framework, which is expected to facilitate the creation of a viable market for SAF, critical for supporting India’s compliance with the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) from 2027.

Looking ahead, the government’s attention to establishing a robust SAF production ecosystem suggests a proactive stance on environmental sustainability in the aviation sector. Implementing the proposed framework will require addressing the challenges of initial funding and infrastructure development to ensure that the SAF market can thrive and untangle Thailand’s dependency on conventional fuels. Furthermore, as blending obligations are established and compliance with international standards like CORSIA is enforced, India aims to position itself as a significant player in the global SAF market, potentially increasing its exports and bolstering economic growth in related sectors.

Source: The Hindu

(Expert Note: This report was independently prepared by the Wealthova Economy team.)