Azospirillum lipoferum MTCC 2306, a free-living nitrogen fixing bacteria, has a doubling time of 1.7 h in MPSS media. At the end of 28 h at a pH of 7 and temperature of 30 °C it produces 1.8 ± 0.013 g/L biomass and 2.1 ± 0.018 g/L of cyclic beta glucan (CβG) in MPSS medium with a yield coefficient (Y P/S ) of 2.1. This novel polysaccharide is a water-soluble cyclic biopolymer and is generally produced by Rhizobiaceae and predominantly made up of glucose. The CβG has a degree of polymerisation varying between 10 and 13 and has both α- and β-glycosidic linkages. It is not substituted with any functional groups such as acetates or succinates. Its ability to bind to aniline blue suggests that it can be a potential candidate for being used as carrier in medical imaging as well as in reducing toxicity of textile effluents. It is able to encapsulate rifampicin, a hydrophobic drug and increase its aqueous solubility by 71%. So, CβG appears to have promising applications in the field of drug, food, cosmetic and nutraceutical industries. © 2019, Springer Nature B.V.