Alginate is an exopolysaccharide composed of varying ratios of β-D mannuronic acid and its C5 epimer α-L-guluronic acid linked together by β-1,4 - glycosidic bond. It has wide range of industrial applications particularly in food sector as a viscosifier, stabilizer, thickener, emulsifier, gelling and water binding agent. Commercial alginate is extracted from brown algae but due to variation in composition of biopolymer isolated from species of different locations, there is growing interest in bacterial alginate. At present two strains of bacteria are reported to produce alginate, Pseudomonas and Azotobacter. Hence present study was designed to produce alginate by Azotobacter vinelandii utilizing cheap substrates to save the foreign exchange. To achieve the goal, different physiochemical parameters were optimized to have hyper-production of alginate through submerged fermentation. Different agricultural wastes like wheat bran, rice polishing and molasses were utilized as substrates through fermentation with Azotobacter vinelandii.On fermentation of 7.5% (w/v) wheat bran by A.vinelandii, maximum alginate production (5.21 g/L) was observed at 48 hours of incubation time with 6% (v/v) inoculum size, pH 7.0, 300C and agitation speed of 200 rpm. Addition of different optimum levels of ionic salts i.e. 1.5% CaCl2 and 2% MgSO4. 7H2O in the growth medium gave significantly (P< 0.05) higher quantity of alginate (6.08 g/L) where as addition of KH2PO4 and NaCl reduced the yield of alginate. Among different nitrogen sources tested, 2% corn steep liquor resulted significantly (P<0.05) higher yield of alginate (7.46 g/L). The bacterial strain was improved by exposure to physical (UV irradiation) and chemical mutagens (Nitrous acid and ethidium bromide) to obtain more than 90% killing. The survivors were screened for hyper-production of alginate against the wild strain of A.vinelandii using pre- optimized conditions. The highest alginate production (13.8 g/L) was obtained by the ethidium bromide treated strain (EtBr-02). The mutant strain was used for optimization of fermentation parameters. The maximum concentration of alginate (15.61 g/L) was obtained by utilizing 10% (w/v) wheat bran, 8% (v/v) inoculum at 48 hours of incubation, pH 7.0, 300C and an agitation speed of 200 rpm. Inclusion of 2.5% cornsteep liquor raised the alginate concentration to 15.8 g/L. Batch fermenter studies were carried out in 2 L fermenter with working volume of 1.5 L using the mutant strain A.vinelandii, EtBr-02. Optimization of process parameters like agitation, aeration and pH in the fermenter showed that maximum alginate (16.8 g/L) was achieved at 300 rpm, 2.5 vvm aeration and controlled pH condition at 32 hours of incubation time. The alginate produced was identified by FTIR spectrum after precipitation. The purity of alginate was estimated by HPLC against the standard alginic acid from Sigma-Aldrich and was found to be 98% pure. The alginate produced was used at 3% concentration for immobilization of yeast cells. Immobilized and free cells were compared for ethanol production using 10% sucrose as the carbon source in fermentation medium. The maximum amount of ethanol obtained was from free cells i.e. 38 g/L whereas immobilized cells produced 32.5 g/L ethanol. The advantage of immobilization is that beads can be reused in eight sequential fermentation cycles of 10 h each. Thus a cheap and practical bioprocess of alginate production was developed, that can be exploited commercially to save foreign exchange.