India has updated its export regulations to allow the export of Second Generation (2G) ethanol. This significant change, effective from September 24, 2025, requires companies to obtain specific export authorisations and feedstock certifications. 2G ethanol is produced from non-food materials, such as agricultural waste like rice and wheat straw, wood waste, and even algae. This is different from first-generation ethanol, which uses food crops like corn or sugarcane.
The Directorate General of Foreign Trade (DGFT), under the Union Ministry of Commerce and Industry, announced the new rules. Companies involved in producing 2G ethanol for both fuel and non-fuel uses can now seek permission to export their products. The raw materials for 2G ethanol are diverse and sustainable. They include agricultural and forestry residues, like rice and wheat straw, corn stalks, and sugarcane bagasse. Woody biomass, non-food crops such as grasses and algae, and industrial waste streams can also be used.
This move away from food-based feedstocks for ethanol production has several benefits. Firstly, it prevents competition between fuel production and food supply, which can help stabilise food prices. Secondly, it helps manage agricultural waste, such as the stubble burning that causes significant air pollution in northern India. By turning this waste into valuable fuel, India is addressing environmental concerns while promoting a circular economy.
India has ambitious goals for ethanol blending in petrol. The country aimed to achieve 20 per cent ethanol blending in petrol (E20) by 2030. This target has already been met five years ahead of schedule. 2G ethanol is seen as a crucial component in meeting future demand for biofuels in a sustainable manner. Globally, 2G ethanol is considered an important step towards advanced biofuels, with several countries in South America and Asia increasing their adoption.
The demand for ethanol in India remains strong. On September 23, Oil Marketing Companies (OMCs) invited bids to supply approximately 10.5 billion litres of denatured anhydrous ethanol for the ethanol supply year (ESY) 2025-26. In the previous ESY (2024-25), until August, a total of 11.59 billion litres of ethanol were contracted, with about 8.2 billion litres already supplied.
India has been making strides in 2G ethanol production. Indian Oil Corporation Ltd established India’s first commercial-scale 2G ethanol bio-refinery in Panipat, Haryana. Inaugurated in August 2022, this plant processes about 200,000 tonnes of rice straw annually to produce around 30 million litres of ethanol. It uses advanced technology from Praj Industries. Although it was operating at around 30 per cent capacity in mid-2024, it plays a vital role in tackling the stubble burning issue in northern India.
Other companies are also investing in 2G ethanol. Hindustan Petroleum Corporation Ltd is building a 100 KLPD 2G plant in Bathinda, Punjab, which will use surplus grains like maize and rice. Numaligarh Refinery Ltd in Assam is set to launch India’s first bamboo-based 2G bio-refinery by late 2025, with an annual production capacity of 50,000 tonnes. The DBT-ICT Centre for Energy Biosciences at the Institute of Chemical Technology, Mumbai, also has a notable history, demonstrating India’s first 2G ethanol pilot plant in 2015. The opening of export markets for 2G ethanol is expected to further drive investment and innovation in this sector.