India SAF cost parity with jet fuel by 2036, report finds
Synopsis
A new report makes the case that India's sustainable aviation fuel is far closer to commercial viability than headline production-cost comparisons suggest. Factor in rupee depreciation, carbon costs, and health benefits from cutting agricultural burning, and SAF could match conventional jet fuel prices as early as 2030 — six years ahead of the base-case 2036 projection.
Key Takeaways
India's SAF industry is projected to reach cost parity with conventional jet fuel by 2036 under base-case assumptions.
PBtL fuel is estimated at $1.42 per litre in 2030 versus $0.97 per litre for conventional jet fuel, but the gap narrows over a 25-year project cycle .
Wholesale jet fuel prices rose 5 per cent annually in rupee terms between 2005 and 2025 , with 3.1 per cent of that driven by rupee depreciation.
Domestic SAF plants can lock in power costs via rupee-denominated PPAs , reducing currency exposure.
Including health benefits from reduced field burning ( $0.38/litre ) and carbon costs ( $0.22/litre ) could bring parity forward to 2030 .
India's agricultural residue and low-cost renewable power provide a structural advantage for scaling a domestic SAF ecosystem.
India's sustainable aviation fuel (SAF) industry could reach cost parity with conventional jet fuel by 2036, with domestic production shielding airlines from currency swings and global commodity price volatility, according to a new report. The findings suggest that evaluating SAF projects on single-year production costs alone significantly understates their long-term economic case.
The Cost Gap and How It Narrows
Power-and-biomass-to-liquids (PBtL) fuel is estimated to cost $1.42 per litre in 2030, against $0.97 per litre for conventional jet fuel — a gap that appears wide in isolation. However, when costs are assessed over a 25-year project cycle, the differential narrows substantially. Researchers placed the levelised cost of PBtL fuel from a plant commissioned in 2030 at ₹127 per litre, only 18 per cent above the adjusted levelised purchase cost of conventional jet fuel over the same period.
The Rupee Depreciation Factor
Historical data spanning 2005 to 2025 shows wholesale jet fuel prices rising by 5 per cent annually in nominal rupee terms. Of that increase, 1.9 per cent was attributed to US dollar commodity inflation, while 3.1 per cent reflected rupee depreciation against the dollar. Domestic synthetic fuel plants can blunt this currency vulnerability, the report noted, because major operational inputs — particularly power — can be locked in through long-term, rupee-denominated power purchase agreements at fixed tariffs.
When Full Parity Could Arrive
Under base-case market assumptions, new synthetic fuel facilities commissioned in 2036 are projected to achieve full levelised cost parity with conventional fuel. The timeline could compress further if broader economic benefits are folded into policy decisions. Monetising health gains from reduced agricultural field burning could contribute an estimated $0.38 per litre in avoided societal costs, while applying carbon pricing could add up to $0.22 per litre. Together, these factors could potentially bring SAF to commercial cost parity as early as 2030, according to the report.
India's Structural Advantage
The report highlighted India's significant agricultural residue base and access to low-cost renewable power as twin pillars for building a viable domestic SAF ecosystem. Scaling domestic production would simultaneously reduce the country's dependence on imported crude oil and limit exposure to foreign exchange risks — both persistent pressure points for Indian carriers. This comes amid growing international regulatory momentum around SAF mandates, making the economics of domestic supply increasingly strategic rather than merely commercial.
What Comes Next
The findings add weight to calls for policy frameworks that account for SAF's full lifecycle value rather than spot production costs. Industry observers argue that blending mandates, carbon cost mechanisms, and health-benefit monetisation could collectively accelerate the commercial viability timeline well ahead of the 2036 base-case projection.
Point of View
But the more consequential finding is the 2030 scenario — and that hinges entirely on whether India's policymakers are willing to price in carbon costs and health externalities that current frameworks largely ignore. The rupee depreciation argument is structurally sound: Indian aviation has quietly absorbed a 3.1 per cent annual currency drag on fuel costs for two decades, a risk that domestic SAF production would fundamentally alter. The missing piece is a blending mandate with teeth. Without regulatory compulsion and a credible carbon pricing signal, the economics remain compelling on paper but insufficient to move private capital at the scale a domestic SAF industry requires.
NationPress
29 Aug 2026
Frequently Asked Questions
When could India's sustainable aviation fuel reach cost parity with conventional jet fuel?
Under base-case market assumptions, SAF produced by domestic plants commissioned in 2036 is projected to achieve full levelised cost parity with conventional jet fuel. If carbon costs and health benefits from reduced agricultural burning are factored in, parity could arrive as early as 2030.
Why is domestic SAF production better for India than importing jet fuel?
Domestic SAF production allows major input costs — particularly power — to be secured through long-term, rupee-denominated power purchase agreements at fixed tariffs. This insulates airlines from the 3.1 per cent annual currency drag that rupee depreciation against the dollar has historically added to imported jet fuel costs.
What is PBtL fuel and what does it cost?
Power-and-biomass-to-liquids (PBtL) is a synthetic fuel pathway that converts renewable electricity and biomass into aviation fuel. It is estimated to cost $1.42 per litre in 2030, compared with $0.97 per litre for conventional jet fuel, though the gap narrows significantly over a 25-year project lifecycle.
How could health benefits accelerate SAF cost parity in India?
Monetising the health gains from reduced agricultural field burning — a major source of air pollution — could contribute an estimated $0.38 per litre in avoided societal costs. Combined with carbon pricing of up to $0.22 per litre, these factors could bring SAF to commercial cost parity with conventional jet fuel as early as 2030.
What natural advantages does India have for building a SAF industry?
India has significant agricultural residue — a key feedstock for biomass-based SAF pathways — and access to low-cost renewable power, both of which support a cost-competitive domestic SAF ecosystem. Scaling this capacity would also reduce dependence on imported crude oil and limit foreign exchange risk for Indian carriers.
