Cabinet approves SAF Manufacturing Promotion Policy 2026, offering stamp duty exemptions, interest subsidies and 100% electricity duty exemption for up to 10 years.
Uttar Pradesh is set to encourage the establishment of facilities producing cleaner fuels for the aviation sector. The Yogi Adityanath-led government plans to develop the state into a major manufacturing hub for sustainable aviation fuel (SAF).
At a cabinet meeting chaired by Chief Minister Yogi Adityanath on Friday, the government approved the Uttar Pradesh Sustainable Aviation Fuel Manufacturing Promotion Policy 2026.
The policy aims to attract large-scale investments, encourage new technologies and innovation, and create green employment opportunities. It will allow SAF producers to use locally available agricultural residues, municipal waste and non-edible oilseeds as feedstocks.
The initiative could also create additional income opportunities for farmers by enabling the utilisation of agricultural residues alongside their conventional produce.
Rice Husk, Wheat Straw and Sugarcane Bagasse Identified as Potential Feedstocks
Uttar Pradesh generates significant quantities of agricultural residues, including rice husk, wheat straw and sugarcane bagasse. Under the policy, these materials can be used to produce SAF through technologies such as pyrolysis and gasification.
The state’s established sugarcane cultivation and ethanol production base could also support the development of the SAF sector. This may create opportunities to produce aviation fuel through second-generation biofuel pathways and alcohol-to-jet (ATJ) technology.
SAF is intended to help reduce carbon emissions from the aviation sector. Its production could also strengthen the state’s energy security and improve the utilisation of agricultural residues by connecting them with industrial applications.
Investments Above ₹200 Crore to Qualify for Incentives
The government will provide a range of financial and policy incentives to encourage investment in these facilities.
The incentives include stamp duty exemptions or reimbursement, exemptions from land-use conversion charges and development fees, reimbursement of net State Goods and Services Tax (SGST), and interest subsidies.
Eligible units will also be entitled to 100% exemption from electricity duty for up to 10 years.
Additional provisions include skill development subsidies, reimbursement of patent registration fees and upfront land subsidies where land is allotted. The policy also allows for special incentive packages for investors, depending on requirements, and the establishment of centres of excellence to promote technology development.
UP NEDA to Oversee Policy Implementation
The Uttar Pradesh New and Renewable Energy Development Agency (UPNEDA) has been designated as the nodal agency responsible for approving and disbursing financial incentives under the policy.
A committee will be constituted under the director of UPNEDA to evaluate applications.
The policy will remain in effect for five years from its implementation date or until a new policy is introduced, whichever comes first.
Through the initiative, the state government aims to boost clean fuel production while attracting investments, advancing technology and generating new employment opportunities. Linking agricultural residues with industrial production is also expected to benefit the rural economy.
