Cabinet Approves ₹10,000 Crore ATF Price Stabilisation Fund & E85 Fuel Policy (Science and Technology)
Cabinet Approves ₹10,000 Crore ATF Price Stabilisation Fund & E85 Fuel Policy (Science and Technology)
Why In News:
The Union Cabinet has approved a ₹10,000 crore Aviation Turbine Fuel (ATF) Price Stabilisation Fund to insulate domestic airlines from global crude oil price volatility.
Simultaneously, the Centre is developing a policy framework to boost E85 fuel (85% ethanol, 15% petrol) uptake in India's automotive sector.
Aviation Turbine Fuel (ATF):
What is ATF? Jet fuel used in aircraft turbine engines. In India, ATF is primarily Jet A-1 grade (international standard).
Pricing: ATF prices in India are revised monthly based on international crude prices, US dollar exchange rate, and applicable taxes. Unlike petrol/diesel, ATF is not under ECA (Essential Commodities Act) control.
Tax Issue: ATF is not under the GST framework — it remains outside GST and is subject to State VAT (varying from 1% to 30%), making air travel expensive in higher-VAT states.
ATF as % of Airline Cost: ATF typically constitutes 35–45% of total airline operating costs in India — far higher than the global average (~20–25%), impacting ticket prices.
UDAN Scheme: Ude Desh ka Aam Naagrik — Regional connectivity scheme using Viability Gap Funding (VGF) to make air travel affordable. ATF price volatility undermines UDAN economics.
E85 Fuel and India's Biofuel Policy:
E85 Fuel: A blend of 85% ethanol and 15% petrol. Currently, India's EBP (Ethanol Blended Petrol) Programme targets 20% ethanol blending (E20) by 2025–26.
National Biofuel Policy 2018 (amended 2022): India's policy framework for biofuels. Categories: Generation 1 (sugarcane, cereals), Generation 2 (cellulosic biomass), Generation 3 (algae), and Advanced Biofuels.
Nodal Ministry: Ministry of Petroleum and Natural Gas. NITI Aayog and MoPNG coordinate on biofuel targets.
E85 Challenge: E85 requires Flex Fuel Vehicles (FFVs) — engines capable of running on any ethanol-petrol blend.