India's commitment to sustainable development has placed significant emphasis on green aviation, especially with the rapid expansion of its aviation industry. The country has emerged as the world's third-largest aviation market due to the growth of low-cost carriers, infrastructure development, increasing disposable income, and the expansion of the tourism industry.

Air passenger traffic in India, comprising both domestic and international travel, is expected to reach 395 million in 2023-24. By FY2030, it is predicted that India's domestic airport passenger numbers will rise to 700 million, while its international airport passenger numbers will reach 160 million. Given this remarkable growth, the aviation industry is under pressure to address its environmental impact. Aircrafts primarily rely on jet fuel and contribute around 2.5 percent of global carbon dioxide emissions.

At the 77th IATA Annual General Meeting (AGM) and World Air Transport Summit, members, which include Air India, Spice Jet, Vistara and IndiGo, convened to discuss necessary steps to achieve net zero carbon emissions by 2050. To accomplish this goal, a multi-pronged strategy has been proposed:

  • Emissions must be eliminated at their source through in-sector solutions. These solutions include the development and use of sustainable aviation fuels, new aircraft technology, and more efficient operations and infrastructure.
  • Zero-emissions energy sources such as electric and hydrogen power must be developed.
  • Any remaining emissions that cannot be eliminated at their source must be eliminated through out-of-sector options. This includes the use of carbon capture and storage technologies, as well as credible offsetting schemes.

In India, the Ministry of Civil Aviation (MoCA) has been spearheading the promotion of sustainable development in the aviation sector by encouraging the use of sustainable aviation fuel (SAF), a green alternative.

Produced from animal fats (biomass), wastes (used cooking oil) and agri-residues (palm fatty acid distillate), SAF can be safely blended with traditional jet fuel, making it a "drop-in" fuel. Unlike hydrogen and electric technologies, the two fuels' chemical characteristics are very similar, and so aircraft and supply infrastructure should not require extensive adaptation. Usage of SAF against conventional jet fuels would result in a lifecycle carbon reduction of up to 80 percent carbon emissions. The Indian government is actively promoting the use of SAF and has set a target of achieving 10 percent blending of SAF with conventional jet fuel by 2030.

The government is working with industry players to develop the SAF supply chain in India. Recently, Indian Oil Corporation, the country's largest fuel retailer, has signed an MoU with LanzaJet, a sustainable aviation fuel producer, to build a commercial-scale SAF plant in India. This plant will produce SAF from non-edible renewable resources such as agricultural waste and forestry residues. The new alliance will establish a factory to create SAF with alcohol-to-jet technology at the state-run company's Panipat refinery in Haryana for a cost of INR 3,000 crore (approximately $ 364.37 million). The government is exploring strategies to provide financial incentives to encourage the production and use of SAF to address the key challenge of its high cost.

Investing in sustainable aviation could help to create new jobs and support economic development in India. The development of the SAF supply chain could create new jobs in areas such as biomass production, waste management, and fuel transportation. It also opens up avenues for investors. 60 corporate clients in India have invested over EUR 1.4 lakh (approximately $ 152,800) towards purchase of about 220,000 tonnes of SAF for their business travel with Lufthansa and Swiss.

Indian aviation companies are also investing in more fuel-efficient planes, such as the Airbus A320neo and the Boeing 737 MAX, which have lower carbon emissions compared to older planes. In addition, the industry is exploring ways to reduce its carbon footprint through carbon offset programs. Indian airlines such as IndiGo and Vistara have launched carbon offset programs that allow passengers to offset the carbon emissions from their flights by investing in renewable energy projects. While India is not participating in the voluntary phases of the Carbon Offsetting and Reduction Scheme for Aviation (CORSIA), offsetting requirements for Indian carriers will begin in 2027.

The MoCA has been actively organising knowledge sharing sessions to standardise the Carbon Accounting and Reporting framework of Indian Airports and creating awareness of climate change mitigation. It has also mandated that airports transition to electric-powered machinery and vehicles to reduce pollution during ground handling operations. In addition, the Indian Government has proposed a Green Aviation Policy to create a regulatory framework to remedy the environmental issues created by the civil aviation industry by identifying key policy areas that require guiding principles and regulations.

The Indian aviation industry is taking important steps towards sustainability, with a focus on promoting the use of SAF and investing in more fuel-efficient planes. Green aviation presents opportunities for investors to facilitate a more robust supply chain, creating new job opportunities and the development of new technologies for more efficient operations and infrastructure, while also addressing the challenge of reducing the industry's environmental impact.

This blog has been co-authored by Mohd. Sufyan Khan. 


We are India's national investment facilitation agency.


For further queries on this subject, please get in touch with us @Invest India.
Raise your query