India opens export market for 2G ethanol amid rising demand

The government has permitted the export of Second Generation (2G) ethanol, produced from non-food, renewable feedstocks such as bagasse, wood waste, and crop residues. A DGFT notification on September 24 stated that exports will be allowed for fuel and non-fuel purposes with a valid authorisation and feedstock certification.

In a significant move for ethanol producers, the government has allowed the export of Second Generation (2G) ethanol.

According to a notification issued on September 24, the Directorate General of Foreign Trade (DGFT) stated that export of 2G ethanol – produced from cellulosic materials such as bagasse, wood waste, industrial residues, lignocellulosic feedstocks like rice and wheat straw, corn stover, woody biomass, as well as non-food crops including grasses and algae – is now permitted. This category of ethanol, recognised for its low CO2 emissions, high greenhouse gas (GHG) reduction potential, and its non-competitive use of land vis-à-vis food crops, must also comply with IS 15464 specifications (as amended from time to time). Exports will be allowed for both fuel and non-fuel purposes, subject to a valid Export Authorisation and feedstock certification from the relevant competent authority.

DGFT clarified, “The effect of this notification is that the additional policy condition for the export of Second Generation (2G) ethanol is hereby notified with immediate effect.”

The development coincides with fresh demand from domestic Oil Marketing Companies (OMCs). On September 25, OMCs floated tenders inviting bids for the supply of nearly 1,050 crore litres of Denatured Anhydrous Ethanol under Cycle 1 of the Ethanol Supply Year (ESY) 2025-26.

Meanwhile, industry data shows robust progress in the ongoing ESY 2024-25. As of August 31, 2025, the total contracted ethanol quantity stood at 1,159.13 crore litres, while actual supplies received by OMCs amounted to about 820.52 crore litres.

This dual development — the opening of export avenues for 2G ethanol and the steady expansion of domestic ethanol blending demand — signals a pivotal moment for India’s ethanol sector, balancing both international trade opportunities and the country’s clean energy transition goals.