Environmental and economic issues have drawn the world’s attention to produce and utilize energy from renewable sources for sustainable development. One of the attempts includes the production of ethanol from various substrates. Many researchers have focused on utilizing lignocelluloses biomass as substrate for the production of ethanol, which mainly contains cellulose and is a cheap and abundantly available material in the world. One of the major problems faced by researchers during production of ethanol from the lignocellulosic biomass is the stress tolerance of yeast cells, due to the nature of the hydrolysed substrate (lignocellulosic material treated with Nitro methyl cellulose (NMC)). One of the solutions for this problem is to encapsulate the yeast cells. Encapsulation is an attractive method, which can enhance the stress tolerance of the yeast cells in the reactor, and also aid in maintaining a high yeast concentration inside the bioreactor and thereby increase the volumetric productivity of ethanol. This report includes a major study on the sodium chloride and ethanol stress tolerance of alginate chitosan alginate (ACA), alginate chitosan (AC) and APTES treated ACA encapsulated yeast biomass in medium containing different concentrations of glucose under anaerobic conditions. AC capsules shows significant results towards osmotic stress and ethanol stress compared with that of freely suspended cells in stress conditions.AC capsule encapsulated yeast tolerated osmotic stress better than ACA capsules in 2M of NaCl where as freely suspended yeast cells unable to tolerate 2M of NaCl . At 100th hour in AC capsules glucose consumption was 12 g/l where as in ACA capsules glucose consumption at same 100th hour was 2 g/l. At 10% ethanol concentration yeast inside ACA capsules showed 5 g/l of glucose consumption but in freely suspended yeast cells there is no glucose consumption as they cannot tolerate higher stress levels.