Cabinet clears ₹20,000 cr schemes for jet fuel support, cleaner Delhi vehicles
One-time budgetary support of up to ₹10,000 crore for OMCs to provide ATF price stabilization amid high crude prices. The budgetary support will be in the form of interest-free advances to OMCs.
New Delhi: To insulate the economy from the ripple effects of the West Asia conflict, the Union cabinet on Wednesday approved two major interventions worth nearly ₹20,000 crore—a ₹10,000-crore fuel price stabilization fund (PSF) for the aviation sector, and a ₹9,585-crore clean transport scheme for Delhi-NCR.
Mint had reported earlier this year that the government is planning a PSF for petroleum products.
The PSF for aviation will offer interest-free advances to oil marketing companies (OMCs), which will help them offer aviation turbine fuel (ATF) at steady prices to Indian airlines, reducing the impact of soaring global jet fuel costs, which is their most significant expense head.
Separately, the clean mobility scheme will encourage the replacement of older commercial vehicles with cleaner BS-VI and electric alternatives, helping tackle pollution in the national capital region while lowering fuel consumption and oil imports.
The aviation PSF
At a media briefing on Wednesday, India’s information and broadcasting, IT and railway minister Ashwini Vaishnaw said that due to the West Asia crisis, international ATF prices have sharply risen from ₹60.5 a litre in March to ₹142 a litre in May, and the PSF would aim to manage this volatility. The West Asia war broke on 28 February.
Vaishnaw said the scheme would reduce the pass-through of fuel price shocks to passengers by moderating fare volatility, while also shielding OMCs from losses arising from costly ATF prices.
Under the scheme, OMCs will be compensated for their losses when global ATF prices exceed the approved benchmark rate at which they can supply airlines. Vaishnaw said the government has capped ATF prices at ₹75.6 a litre for domestic operations.
Once international prices moderate, the compensation will be recovered from the OMCs and returned to the Consolidated Fund of India. The arrangement will continue until the full amount is recovered, the government said in a statement.
Funded through the Economic Stabilisation Fund, which was launched in March with an initial corpus of ₹57,381 crore, the PSF scheme will be open to all willing Indian scheduled carriers for domestic and international operations.
The arrangement will be implemented through an agreement between participating Indian airlines and OMCs, with the ministries of aviation and petroleum as signatories.
Under this one-time arrangement, participating airlines will buy ATF from OMCs for a 36-month period, subject to annual review and ending once the support amount is fully recovered or settled, whichever is earlier.
The scheme can be extended if the corpus remains unutilized, the government statement said.
In an exchange filing on Wednesday, IndiGo, India’s largest airline, welcomed the PSF move. “This timely intervention is a welcome relief that reflects the government's understanding of the critical role aviation plays in connecting people and enabling economic growth, while also fostering an environment that empowers airlines to serve passengers better and contribute towards India’s journey as a global aviation hub,” the statement said.
To be sure, a special ₹5,000 crore carve-out was also done for the sector under the new Emergency Credit Line Guarantee scheme (ECLGS) 5.0 scheme in March 2026.
While ATF price has been capped for domestic operations, Indian carriers continue to purchase ATF for international operations at import parity prices, exposing them to elevated fuel costs. The PSF aims to curb this volatility.
Clean transport scheme
Meanwhile, Vaishnaw said that the clean transport scheme for Delhi-NCR is expected to significantly reduce vehicular emissions and contribute to improved air quality by accelerating the transition to cleaner transport technologies.
The scheme aims to incentivize owners of older trucks and buses to replace them with BS-VI or stricter emission-compliant vehicles, or EVs.
According to Vaishnaw, the scheme will benefit approximately 207,000 vehicle owners — including 191,000 trucks and 16,329 buses — in Delhi-NCR (comprising Delhi, Haryana, Rajasthan, and Uttar Pradesh).
According to a government statement, the ₹9,585-crore scheme would include ₹5,041 crore from the central government and an estimated ₹1,601 crore cumulative tax concessions from the participating states. In addition, participating automobile companies will offer 8% discounts on ex‑showroom prices of new vehicles.
Under the scheme, the Centre will provide 5% interest subvention on loans for five years, monthly fuel vouchers worth up to ₹4,800 depending on vehicle category, and lump-sum benefits for EV purchases or certificate of deposit trading.
The states will waive registration fees and grant up to 100% motor vehicle tax concessions for new vehicles and 50% for used vehicles for 10 years. State governments will also waive off pending liabilities on old vehicles participating in the scheme.
“The approval of this scheme is a positive step towards accelerating fleet modernisation and cleaner mobility in the Delhi-NCR region," Girish Wagh, managing director and chief executive at Tata Motors, said.
“Aligned with our commitment to make cargo and passenger transportation greener and more efficient, we are well positioned to support this transition through our expansive portfolio of BS-VI and zero-emission commercial vehicles, and our nationwide network of Re.Wi.Re registered vehicle scrapping facilities. We look forward to studying the finer details of the notification to further align our efforts towards building a more sustainable and modern commercial vehicle ecosystem,” Wagh added.
Road projects
In other decisions, the Cabinet Committee on Economic Affairs (CCEA), which also met on Wednesday, cleared highway projects with an investment of over ₹24,000 crore.
A new coastal highway project in Odisha — from Rameshwar to Paradeep — would be developed on the hybrid annuity model (HAM) under two packages with a combined total length of 160.18 km and combined total capital cost of ₹8,300.79 crore.
The CCEA also approved several other highway projects across Bihar, Telangana and Madhya Pradesh. These include the four-laning of the 143.5-km Khagaria–Purnea stretch of NH-31 and NH-231 in Bihar at a cost of ₹3,936 crore; the widening of sections of NH-63 and NH-563 in Telangana, covering 190.8 km, with an investment of ₹7,597 crore; and the upgradation and widening of stretches of NH-347B in Madhya Pradesh at a cost of ₹4,416 crore.
Dipali Banka and Ayaan Kartik contributed to this story.