India's Emerging Role in Global Jet Fuel Markets: Strategic Arbitrage and Supply Chain Resilience

In the evolving landscape of global energy markets, India is carving out a distinctive niche in the jet fuel sector, leveraging strategic arbitrage and supply chain resilience to position itself as a pivotal player. As the world grapples with decarbonization imperatives and energy security concerns, India's abundant feedstock, policy agility, and industrial scale are creating a compelling case for investment.

Strategic Arbitrage: From Surplus to Premium

India's jet fuel production has long outpaced domestic consumption, with surplus aviation turbine fuel (ATF) exported to markets where demand outstrips supply. However, the country's pivot to Sustainable Aviation Fuel (SAF) is amplifying this arbitrage. By 2025, India aims to produce 53 million litres of SAF for international flights, with a target of 720 million litres by 2030 for broader blending ambitions. This surge is driven by its unique feedstock advantage: over 230 million tonnes of agricultural residue, 750 million tonnes of biomass, and 3.4 million tonnes of used cooking oil. Unlike the EU's costly "mandate-first" approach, India's focus on feedstock aggregation and affordability is enabling it to produce SAF at competitive costs, potentially undercutting global peers by 30–40% according to industry analysis.

The economic implications are profound. A 10% SAF blend could offset $5–7 billion in annual aviation fuel imports while creating 1 million green jobs according to KPMG analysis. For investors, this represents a dual opportunity: capitalizing on India's domestic SAF ecosystem and exporting to markets like the EU, where CORSIA and ESG-linked mandates are driving demand.

Supply Chain Resilience: Diversification and Collaboration

India's approach to supply chain resilience is rooted in diversification and strategic partnerships. The country's tripartite model-uniting airlines, SAF producers, and the government-ensures demand predictability and policy support. For instance, Air India and IndianOil signed a MoU to supply SAF, with IndianOil's Panipat Refinery set to produce 35,000 tonnes annually using LanzaJet's alcohol-to-jet technology. Such collaborations mitigate risks for private players, who might otherwise hesitate to invest in capital-intensive SAF infrastructure.

Internationally, India is deepening ties to secure its position. The Global Biofuel Alliance, launched with the U.S. and Brazil at the G-20 Summit, and partnerships with Neste and Airbus highlight India's ambition to export not just fuel but also its model of scalable, cost-effective SAF production. These efforts align with Canada's emphasis on resilient clean energy supply chains, further cementing India's role as a global hub.

Export Agreements and Market Access

While specific 2025 export agreements remain unannounced, India's policy architecture is primed for rapid scaling. The government's phased blending targets-1% by 2027, 5% by 2030-create a clear pathway for domestic adoption, while its surplus production potential by 2040 positions it to export SAF to markets with stringent ESG requirements according to industry analysis. For example, the EU's 2% SAF mandate by 2025 and China's 50,000-tonne target by 2025 present immediate opportunities.

Moreover, India's CORSIA-compliant SAF production, certified by ISCC standards, ensures access to premium markets. As noted by KPMG, India's surplus capacity could meet 10–15% of global SAF demand by 2040, rivaling the U.S. and Brazil.

Investment Implications

For investors, India's jet fuel market offers a rare confluence of policy tailwinds, industrial momentum, and global demand. Key sectors to watch include:
1. Feedstock Infrastructure: Companies managing agricultural residue or used cooking oil collection networks.
2. Refinery Upgrades: Public and private players retrofitting facilities for SAF production (e.g., IOCL, BPCL).
3. Technology Partnerships: Firms like LanzaJet, whose alcohol-to-jet technology is critical to India's ethanol-to-SAF strategy.

However, risks persist. Feedstock aggregation remains fragmented, and high production costs-though lower than global averages-still require subsidies or carbon credits to be fully competitive according to industry reports. Investors must also navigate regulatory shifts, as the government's final SAF policy is still in draft form.

Conclusion

India's emergence as a jet fuel powerhouse is not a distant dream but a strategic inevitability. By harnessing its feedstock abundance, policy agility, and global partnerships, the country is transforming a domestic surplus into a global arbitrage. For investors, the challenge lies in identifying early-stage players poised to benefit from this transition-those who can navigate the current uncertainties and scale with the sector's explosive growth.