India–US Trade Deal: Concerns from Indian Agri-Sectors

As India and the US work to conclude a bilateral trade agreement by July 9, key Indian agricultural industries — sugar and soybean — have raised objections.

Context: 

• The US is the world’s top producer and exporter of maize and fuel ethanol, and second only to Brazil in soybean production.

• Amid global trade realignments, the US is seeking new markets, increasing pressure on India to relax import restrictions.

• Indian industries fear that importing ethanol, GM maize, and GM soyabean may harm domestic producers.

India’s Ethanol Blending Programme: A Success Story

• Ethanol blending in petrol rose from 1.5% (2013-14) to 14.6% (2023-24).

• As of May 2025, the ratio has reached 18.8%, close to the 20% target by 2025-26.

Shift from Sugarcane to Grain-Based Ethanol

• Since 2018-19, ethanol production has increasingly used grains like maize and surplus rice.

• In 2024-25, 68% of India’s 1,047.9 crore litres ethanol output is grain-based.

• Maize alone contributes 483.9 crore litres, surpassing sugarcane sources.

Millers' Concerns on Ethanol Imports

• Sugar millers fear sugarcane’s declining relevance in ethanol production.

• With stagnant sugar demand, millers aim to diversify into ethanol-blended fuels.

• They oppose import of ethanol and GM maize, fearing it may further marginalise sugarcane.

Food vs. Fuel Debate

• Millers argue sugar-based ethanol avoids food/feed conflicts, unlike maize, a key feed for livestock.

• Diverting maize for fuel may strain supplies for dairy, poultry, and egg sectors.

India: A Major Buyer of US Ethanol

• The US exported 724.5 crore litres of ethanol in 2024.

• India was the third largest importer, buying 70.8 crore litres worth $441.3 million.

• However, India restricts ethanol imports to non-fuel industrial use under licence.

Push for GM Maize by NITI Aayog

• A working paper supports importing GM maize from the US for ethanol.

• Byproducts (e.g., DDGS) can be exported to avoid domestic market disruptions.

• The aim: achieve biofuel targets without affecting local food/feed supply.

Soybean Industry's Opposition to GM Imports

SOPA's Objections:

• Importing soyabean, extracting oil for domestic use, and exporting GM meal is logistically inefficient.

• Most processing units are inland, making transport from ports unviable.

• Threatens the livelihood of ~7 million farmers.

Comparative Market Concerns

• India crushes 11–12 million tonnes of soyabean annually; exports only ~2 million tonnes.

• In contrast, China processes over 100 million tonnes mainly for livestock.

Risks of Foreign Dominance

• If GM meal can't be sold locally, processing will shift to ports, favouring global agri-traders like Cargill, ADM, etc.

• This could displace domestic processors from the value chain.

Import Duty Cuts: Additional Pressure

• Centre reduced import duties on crude soyabean, palm, and sunflower oil from 27.5% to 16.5%.

• Cheaper imports risk undercutting Indian processors, many of whom may shut down or cut operations.

Impact on Farmers

• Soyabean prices are currently ₹4,300–₹4,350/quintal, far below the MSP of ₹5,328.

• Rising imports may further depress prices, leading farmers to shift to other crops.