India-US Trade Deal Faces Resistance from Sugar and Soybean Sectors

India-US Trade Deal Agriculture Concerns Latest News

• As India and the US push to finalise a bilateral trade deal before the July 9 deadline, two major Indian agri-industries are expressing concern. 
• The sugar industry opposes the import of ethanol and genetically modified (GM) maize for fuel blending, while the soybean processing industry is against GM soyabean imports. 
  • It should be noted that the US is the world’s top producer as well as exporter of both maize and fuel ethanol. 
  • Also, it is the second biggest producer and exporter of soybean after Brazil.
• With the US seeking new markets amid geopolitical shifts, pressure is mounting on India to ease import restrictions. 
• However, these domestic sectors fear such concessions could hurt local producers.

Ethanol Blending A Policy Success

• India’s ethanol blending programme has grown significantly under the Modi government.
• Average ethanol blending in petrol rose from 1.5% (2013-14) to 14.6% (2023-24).
• In the current supply year (Nov 2024–May 2025), the blending ratio reached 18.8%, nearing the 20% target by 2025-26.

Shift from Sugarcane to Grains

• Since 2018-19, sugar mills have started using grains (especially maize and surplus rice) alongside molasses for ethanol.
• In 2024-25, 68% of the 1,047.9 crore litres of ethanol is grain-based.
• Maize alone contributes 483.9 crore litres, overtaking sugarcane-based sources.

Millers’ Concerns Over Ethanol Imports

• Sugar millers are worried that sugarcane is losing importance as more ethanol is now being made from grains like maize. 
• They fear that if India starts importing ethanol or genetically modified (GM) maize, sugarcane will be pushed aside even more. 
• Since sugar consumption in India is not growing, millers see their future in energy—like ethanol-blended diesel or aviation fuel—rather than in producing sugar.

Food vs Fuel Debate

• Millers argue ethanol from sugarcane avoids food/feed conflicts.
  • Unlike maize, sugar isn’t a key livestock or poultry feed.
  • Diverting maize to fuel may strain supply for animal feed, affecting dairy, poultry, and egg sectors.

India A Key Market for US Ethanol

• The US exported 724.5 crore litres of ethanol in 2024, with India as the third largest buyer (70.8 crore litres worth $441.3 million).
• India restricts ethanol imports to non-fuel industrial use and under licence.

NITI Aayog Push for GM Maize Imports

• A working paper suggests importing cheaper US GM maize for ethanol.
• Its byproduct (DDGS – distiller’s dried grains with solubles) can be exported to avoid domestic feed concerns.
• Authors claim this will help India meet biofuel targets without disturbing local food chains.

Concerns of India’s Soyabean Industry

A NITI Aayog paper suggests importing soyabean, extracting oil for domestic use, and exporting the leftover GM-based de-oiled cake (meal).

SOPA’s Opposition to the Plan

• The Soybean Processors Association of India (SOPA) rejects the proposal due to logistical and economic challenges:
  • Most solvent extraction units are located inland (MP, Maharashtra), far from ports.
  • Transporting imported beans from ports to plants and then exporting the meal is not cost-effective.
  • Such a policy threatens the livelihood of nearly 7 million soyabean farmers.

Limited Domestic Demand vs. China

• India processes 11–12 million tonnes of soyabean yearly, with most meal used domestically for food and feed.
• Only ~2 million tonnes is exported, unlike China which crushes over 100 million tonnes annually for its massive livestock industry.

Fears of Foreign Dominance

• If GM meal cannot be sold domestically, processing must shift closer to ports for export.
• This could invite dominance by global agri-trading giants (e.g., ADM, Cargill, Bunge, Louis Dreyfus), pushing out domestic processors.

Import Duty Cuts Add Pressure

• Recently, the Centre reduced the import duty on crude soyabean, palm, and sunflower oil from 27.5% to 16.5%.
• SOPA fears this will undercut local processors by making imported oils cheaper, forcing many to shut or operate below capacity.

Falling Soyabean Prices Hurt Farmers

• Soyabean is currently trading at ₹4,300–₹4,350/quintal in MP and Maharashtra—well below the MSP of ₹5,328.
• Cheap imports of oil or seed could further depress prices and cause farmers to shift to other crops.

Source IE | CNBCTV18