The DGCA will require airlines to report 90% of annual carbon emissions for international flights to meet global CORSIA standards. This regulatory shift prepares the aviation sector for mandatory Sustainable Aviation Fuel (SAF) blending targets starting in 2027.
The Directorate General of Civil Aviation (DGCA) is rolling out a new requirement for aircraft operators to track and report at least 90% of annual carbon emissions from international flights operating out of Indian airports. This regulation is part of India’s alignment with the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), a global framework designed to curb the environmental impact of air travel.
Preparing for SAF Blending Targets
Beyond carbon reporting, the aviation sector is transitioning toward the use of Sustainable Aviation Fuel (SAF). The government has set clear milestones, aiming for a 1% SAF blend in jet fuel by 2027, which is scheduled to increase to 2% by 2028 and reach 5% by 2030. These targets are intended to reduce the carbon footprint of the aviation industry, which has faced pressure to adopt greener energy sources.
Production Readiness and Industry Impact
To support these targets, Union Civil Aviation Minister Ram Mohan Naidu has been coordinating with Oil Marketing Companies (OMCs) to establish a domestic supply chain for SAF. Refineries located in Panipat and Mumbai are currently reaching advanced stages of production readiness. The government is also encouraging private sector investment to expand manufacturing capacity, as the cost and availability of SAF will be critical factors in meeting these mandates without significantly raising operating costs for airlines.
Financial and Operational Context for Airlines
For airline investors, this shift toward green mandates introduces both long-term sustainability goals and potential short-term cost pressures. While the transition aims to align India with global environmental standards, the cost of SAF is generally higher than traditional jet fuel. The final impact on airline profitability will depend on how the government manages the transition, the availability of domestically produced fuel, and the ability of carriers to absorb or pass on these costs.
Next Steps for Investors
Investors should monitor the finalization of the national SAF policy, which will provide further clarity on the operational roadmap. Key monitorables include the operational timeline for refinery capacity, the cost-effectiveness of domestically produced SAF compared to imports, and any potential incentives the government may offer to mitigate the financial burden on the aviation sector as the 2027 mandatory start date approaches.