A refinery can produce sustainable aviation fuel. Building the feedstock supply chain to keep it running is the real challenge.(Image Courtesy - X @AkasaAir)
NEW DELHI: BPCL and Akasa Air signed a Memorandum of Understanding on July 14 to collaborate on the development and supply of Sustainable Aviation Fuel in India. The agreement centres on BPCL’s upcoming 61 KTPA SAF facility at its Mumbai refinery which is expected to be commissioned by the end of 2026.
However a closer reading of the MoU reveals what it does not contain. There are no binding volume commitments, no blending percentage targets, no pricing formula and no named airports for supply. What has been announced is essentially a framework for future collaboration rather than a firm commercial contract, raising the question of how much this deal actually moves India’s green aviation ambitions forward today.
What the Agreement Actually Covers
The MoU outlines four broad areas of cooperation. It sets up a baseline offtake framework, establishes a data-sharing arrangement where Akasa provides demand forecasts to BPCL, lays out a phased and non-binding roadmap for scaling blending and commits both parties to joint policy advocacy with the government. For Akasa this allows it to publicly align itself with upcoming decarbonisation mandates without immediately taking on high-cost fuel liabilities. For BPCL it provides a credible offtake partner to showcase as it justifies its refining investment to internal stakeholders.
Notably this is Akasa’s first SAF-related agreement of any kind. The airline has so far relied only on fleet efficiency measures rather than any physical blended fuel usage or demonstration flights.
Is 61 KTPA Actually Significant
BPCL’s Mumbai facility will use a mix of Hydroprocessed Esters and Fatty Acids technology and Alcohol-to-Jet pathways drawing on used cooking oil and agricultural residue. On its own 61 KTPA represents just over half a percent of India’s total annual jet fuel consumption which stood at nearly 9.9 million tonnes in FY26.
However the picture changes when measured against India’s upcoming international blending mandate. From 2027 a 1% SAF blending requirement applies to international departures which translates to roughly 39,500 tonnes of national demand. On that basis BPCL’s single facility is theoretically sized to cover the entire national mandate on its own with room to spare. This suggests the facility is less about meeting today’s total fuel demand and more about positioning BPCL as a dominant early supplier once mandates kick in.
The Feedstock Problem
The bigger challenge lies upstream in sourcing raw material. India generates close to 3 million tonnes of used cooking oil annually but organised collection under the government’s RUCO programme has captured barely 5,000 tonnes so far. That means a single 61 KTPA facility relying purely on used cooking oil would need over twelve times the current national collection volume just to run at capacity.
Agricultural residue offers a theoretically larger pool, estimated at 230 million tonnes annually but aggregating and transporting this waste from scattered smallholder farms to centralised refineries remains logistically difficult and expensive. Municipal solid waste pathways meanwhile are still considered too capital intensive for near-term deployment. In other words the refining capacity may exist on paper well before the supply chain needed to feed it does.
Why the Economics Remain Difficult
Cost is the other major hurdle. Sustainable Aviation Fuel typically costs three to five times more than conventional jet fuel globally and in India this gap widens further due to fuel taxation. Aviation turbine fuel sits outside the unified GST structure, leaving individual states free to levy their own VAT which has historically run as high as 25% in Delhi.
Both Delhi and Maharashtra temporarily cut this VAT to 7% earlier this year citing regional fuel cost pressures but these cuts expire in November, making it difficult for any airline to plan long-term SAF contracts around a tax rate that could revert within months. India also currently has no dedicated production-linked incentives or tax credits specifically for SAF refiners, unlike several Western markets.
The Global Pressure
Part of the urgency behind such partnerships comes from international rules rather than domestic ambition alone. From January 2027 Indian carriers flying international routes will be required to comply with the mandatory phase of ICAO’s CORSIA emissions scheme. Airlines expanding into Europe face an even nearer deadline, since EU rules already require a minimum SAF blend for flights departing European airports, a threshold that rises sharply over the coming decade.
For airlines like Akasa which are expanding internationally securing early SAF access is as much about future compliance as it is about sustainability messaging today.
The Framework
Taken together the Akasa-BPCL MoU looks less like a finished commercial deal and more like an early positioning move by both companies ahead of mandates that begin biting from 2027. BPCL secures a demand-side partner to validate its refining investment while Akasa gains a sustainability narrative without near-term financial exposure.
Whether this translates into actual blended fuel moving through Indian airports will depend on factors well outside this MoU, particularly whether India can build a functioning feedstock collection network and a stable, long-term tax framework before the clock on international mandates runs out.
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