Article on DGFT’s Notification No. 32/2025-26 dated 24th September 2025 Export Policy of Second Generation (2G) Ethanol under HS Code 22072000 – A Regulatory Shift Toward Sustainable Trade

1. Introduction

On 24th September 2025, the Directorate General of Foreign Trade (DGFT) issued Notification No. 32/2025-26, along with Trade Notice No. 12/2025-26, bringing a significant policy amendment regarding the export of Second Generation (2G) Ethanol classified under ITC (HS) Code 22072000. This notification inserts an additional export policy condition under Schedule-II of the ITC (HS) Export Policy 2022, thereby regulating the export of ethanol derived from cellulosic and lignocellulosic biomass.

2. Legal Backdrop

The amendment has been made under:

• Section 3 and Section 5 of the Foreign Trade (Development & Regulation) Act, 1992
• Para 1.02 and 2.01 of the Foreign Trade Policy (FTP) 2023, as updated

This empowers the Central Government to impose necessary conditions to regulate exports in the national interest—especially when linked to energy security, sustainability goals, or domestic industry development.

3. Overview of the Amendment

Key Condition Introduced:
Exports are only permitted for Second Generation (2G) Ethanol, defined as ethanol produced from non-food, non-edible, cellulosic or lignocellulosic feedstocks. These include:

• Agricultural and forestry residues (e.g., rice straw, wheat straw, corn stover)
• Industrial waste (e.g., bagasse, wood chips)
• Non-food crops (e.g., algae, grasses)
• Woody biomass
• Other renewable biomass streams

4. Key Criteria and Compliance

To qualify for export, the ethanol must:

• Be produced from approved non-food biomass sources that do not compete with food crops.
• Meet BIS 15464 specifications (as amended from time to time).
• Demonstrate low CO2 emissions or high GHG reduction potential.
• Be exported only after obtaining Export Authorization and feedstock certification from the designated authority.

5. Rationale Behind the Policy Shift

a. Promoting Sustainability and Circular Economy

The restriction ensures that only ethanol produced from sustainable, waste-based sources is exported, aligning with India’s commitment to:

• The Paris Agreement targets
• United Nations Sustainable Development Goals (SDGs)
• National Bio-Energy Policy

b. Prioritizing Domestic Energy Security

As part of the National Bio-Ethanol Blending Programme, India aims to achieve 20% ethanol blending in petrol by 2026. This amendment prevents diversion of valuable ethanol for exports that could otherwise be utilized domestically for:

• Reducing fossil fuel imports
• Enhancing energy independence
• Supporting rural income through biomass procurement

c. Discouraging Use of Food Crops in Fuel

By restricting exports to 2G ethanol only, the policy discourages the use of food-based feedstocks (e.g., sugarcane, corn) for ethanol, thereby:

• Preventing competition between fuel and food
• Containing potential inflationary pressure on essential commodities

6. Trade and Industry Implications

a. Exporters' Obligations

Exporters must now:

• Apply for Export Authorization from DGFT
• Ensure that feedstock used is certified as non-food, cellulosic, or lignocellulosic
• Provide evidence of compliance with BIS 15464 standards
• Use the ethanol for fuel, industrial, or non-fuel permissible uses only

b. Operational Clarity through Trade Notice No. 12/2025-26

To facilitate understanding and ease of compliance, Trade Notice No. 12/2025-26:

• Clarifies definitions of 2G ethanol
• Guides exporters on documentation and approval process
• Reiterates the need to adhere strictly to FTP 2023 and Schedule-II of the ITC (HS)

7. Strategic Significance

a. Boost to Green Exports

This policy encourages development and export of green fuels, strengthening India's positioning in the global biofuels market, especially in light of growing demand for sustainable energy alternatives in Europe and Asia.

b. Infrastructure and Innovation Push

By favouring second-generation ethanol, the government incentivizes:

• Establishment of advanced bio-refineries
• Investments in R&D of biomass conversion technologies
• Adoption of waste-to-energy models

8. Validity and Further Updates

As this is an enabling provision inserted via notification, DGFT may:

• Release additional guidance on certifying agencies, monitoring protocols, and inspection processes
• Impose or lift restrictions based on domestic production capacity, availability of feedstock, or strategic export needs

9. Conclusion

The export policy amendment through Notification No. 32/2025-26 marks a strategic convergence of trade policy with environmental stewardship and energy security. By allowing the export of only Second Generation Ethanol, India takes a significant step toward becoming a leader in sustainable fuel trade, while ensuring domestic interests are safeguarded.

Stakeholders—especially exporters, customs authorities, and biofuel manufacturers—must ensure strict compliance with the revised policy to benefit from the new opportunities without violating regulatory norms.