Centre sets new conditions for ‘export’ of 2G ethanol

The Central Government has introduced an additional policy condition for the export of second-generation (2G) ethanol, a biofuel produced from non-food materials such as bagasse, wood waste, agricultural residues, and other renewable resources.

In its notification dated September 24, the Directorate General of Foreign Trade (DGFT) said that the export of 2G ethanol — derived from cellulosic materials like rice and wheat straw, corn stover, bagasse, forestry residues, woody biomass, grasses, algae, and other non-food crops — will be permitted for both fuel and non-fuel purposes.

The notification held that such ethanol is regarded as more sustainable as it generates lower carbon emissions, significantly reduces greenhouse gases, and does not compete with food crops for farmland.

However, the permission is conditional upon obtaining valid export authorisation and feedstock certification from the competent authority. DGFT clarified in the notification that consignments would be subject to verification checks to ensure compliance with the new rules. The notification has come into effect immediately.

2G Ethanol & India’s decarbonisation quest

Second-generation ethanol, or ethyl alcohol, is considered a greener alternative to conventional biofuels as it is produced from agricultural waste, forestry residues, and industrial by-products. It helps reduce dependence on fossil fuels, supports waste management, and aligns with India’s climate commitments.

India had initially targeted 20 per cent ethanol blending with petrol by 2030. However, given rapid progress in ethanol production, the timeline was advanced to 2025–26. To achieve this, the government has broadened feedstock options, encouraged maize-based ethanol clusters, and allocated 52 lakh metric tonnes of surplus Food Corporation of India (FCI) rice each for the ethanol supply years (ESY) 2024–25 and 2025–26. Additionally, 40 LMT of sugar has been diverted for ethanol production in ESY 2024–25.

As per reports, as of August 31, 2025, ethanol suppliers had contracted 1,159.13 crore litres for ESY 2024–25, while actual supply stood at about 820.52 crore litres. A day before the DGFT’s notification, Oil Marketing Companies (OMCs) floated bids to procure around 1,050 crore litres of Denatured Anhydrous Ethanol for cycle 1 of ESY 2025–26.

The new policy condition is expected to streamline exports while ensuring sustainable and certified feedstock use for 2G ethanol.