To deal with the rising demand of fossil fuels and their associated untoward environmental and economic effects, the feasibility of Indian government's green move towards blending of 20% fuel grade ethanol with gasoline has been studied by performing techno-economic-environmental analysis of second generation lignocellulose biomass as feedstock. An optimized supply chain network (SCN) has been designed with four layers of structure starting from raw material suppliers to the retailers through the layers of the manufacturers and the distributors aiming at the net present value (NPV) maximization. The cost calculation includes operating expenditure (OPEX) and capital expenditure (CAPEX) components involving transport, storage, production and import decisions as linear variables and decisions on connections between two nodes between two consecutive layers as binary variables. The distribution layer of the mixed integer linear programming (MILP) model has been uniquely designed for the imported ethanol to serve the twin purposes of meeting the unmet demand as well as enhancing the bio-ethanol product quality in terms of research octane number. The revenue generation is calculated not only from selling the final product but also from the carbon credits calculated using greenhouse gas emission (GHGe) during project life cycle assessment. Further, sensitivity analysis has been performed to show the effect of various parameters such as modes of transport, transport distance limitation on feedstock and product, number of zones, international fuel price fluctuations, feedstock availability on NPV. With ∼80% increase in demand over the 9-year planning horizon, a dynamically changing supply chain (SC) structure shows a ∼36% increase in the newly added locations. Feed availability, critical for Indian scenario, to the tune of at least 40% of the capacity is needed to meet the projected demands. © 2019 Elsevier Ltd