Biofuel push: Govt allows ethanol blending in aviation turbine fuel amid Middle East conflict

In response to the current Middle East conflict and a drive for cleaner energy, the Ministry of Petroleum and Natural Gas has authorised ethanol blending in aviation turbine fuel (ATF). This initiative aims to foster sustainable aviation fuel (SAF) production while curbing the nation's reliance on foreign oil imports.

The move aligns with a nationwide strategy to integrate biofuels across multiple industries.

On 17 April 2026, the ministry issued an order regarding amended ATF marketing regulations, officially redefining jet fuel as a hydrocarbon mix that may incorporate synthesised components, provided they meet Indian quality standards.

This policy shift is designed to slash carbon footprints and mitigate the risks of importing crude oil. SAF offers a cleaner-burning alternative that requires no significant modifications to existing aircraft engines or infrastructure.

With India currently importing over 80% of its petroleum, the country remains vulnerable to global market volatility. Ongoing geopolitical instability in West Asia has intensified these energy security concerns, prompting Union Minister Nitin Gadkari to emphasise the urgent need for domestic energy self-reliance.

To support this transition, the government is championing green hydrogen and flex-fuel vehicles. Gadkari highlighted that the forthcoming Corporate Average Fuel Efficiency (CAFE) III norms, scheduled for April 2027, will likely favour electric and flex-fuel technology.

This regulatory update represents a pivotal shift toward sustainable energy in the aviation sector. Although the full transition will be gradual, it serves as a critical milestone in strengthening India’s energy security and meeting environmental goals.

Highlighting the need to reduce dependence on fossil fuels, Gadkari said: “In the near future, India should aspire to achieve 100% ethanol blending.”

Fuel price freeze

Under-recoveries on petrol have expanded to 18 per litre and 35 per litre for diesel as state-run fuel retailers maintain a price freeze despite skyrocketing input expenses, according to PTI sources.

Despite the deregulation of fuel prices over 10 years ago, Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL), and Hindustan Petroleum Corporation Ltd (HPCL) have kept retail rates static since April 2022.

International crude oil prices have experienced extreme volatility during this window—climbing above $100 per barrel after the Russia-Ukraine conflict, dropping to $70 earlier this year, and then spiking to approximately $120 last month following supply alarms triggered by US-Israel strikes on Iran.

These three companies were haemorrhaging roughly ₹2,400 crore daily at last month’s peak. These losses have since moderated to about ₹1,600 crore per day following a government decision to slash excise duty on petrol and diesel by ₹10 per litre. This tax cut was notably not passed to the public, but instead utilised to cushion company losses, industry insiders noted.

The heavy deficits recorded in March have effectively erased the profits generated in January and February. Consequently, sources suggest the three firms are poised to report significant losses for the January-March quarter.

India, which relied on imports for 88% of its crude oil needs in 2025, remains acutely vulnerable to global market shifts. Currently, 45% of imports originate from the Middle East, 35% from Russia, and 6% from the United States. Even with this high import dependency, the nation remains a net exporter of refined petroleum products like diesel, petrol, and aviation turbine fuel.