Why is News :
- India and the United States are negotiating a bilateral trade agreement ahead of a July 9 deadline, to avoid the reimposition of the US’s “reciprocal tariffs” regime.
- Two key agro-industries in India — sugar mills and soybean processors — have raised concerns about the likely import concessions that the deal may involve.
Key Concerns of Indian Agro-Industries
Sugar Mills & Ethanol Blending Programme
India has achieved significant progress in its Ethanol Blending Programme (EBP):
- Ethanol blending in petrol increased from 1.5% in 2013–14 to 18.8% in 2024–25, aiming for 20% by 2025–26.
- Ethanol is produced from both sugarcane-based and grain-based feedstocks.
- In 2024–25, 68% of ethanol supply was from grains (especially maize); only 32% from sugarcane (molasses and juice).
- Industry fear: Allowing imports of ethanol or GM maize will further marginalize sugarcane as a feedstock.
- Reduces the future role of sugar mills in India’s biofuel goals (e.g., ethanol for diesel blending, aviation fuel).
- US is the largest ethanol exporter and sees India as a key market (India was the 3rd largest buyer of US ethanol in 2024).
Soybean Processing Industry Concerns
- India’s domestic processors handle 11–12 million tonnes of soybean annually, supporting 7 million farmers.
Concerns raised by SOPA (Soybean Processors Association of India):
- Imports of GM soybean or its oil will hurt domestic crushers due to high freight costs and port-centric processing.
- Recent tariff cut on imported crude oils (from 27.5% to 16.5%) has already weakened their margins.
- Imported oil would undercut domestic prices; mandi rates are already below MSP (₹4,300 vs ₹5,328/quintal).
- There’s no domestic market for GM de-oiled meal (a byproduct), which would need to be exported — a challenge for inland plants.
NITI Aayog Position
A working paper suggests importing US GM maize for ethanol, claiming:
- It’s cheaper and won’t interfere with domestic food/feed supply.
- DDGS (byproduct) could be exported to avoid domestic GM contamination.
- It also suggests exploring GM soybean imports for oil extraction and exporting the meal.
Strategic & Economic Considerations
India–US Trade Balancing Act
- India needs to prevent tariff retaliation from the US while protecting its domestic agri-economy.
- US wants greater market access for its agri-exports (corn, ethanol, soybean), partly due to strained China ties.
Domestic Stakeholder Pressure
- Agro-processing industries employ millions and are politically sensitive.
- Rising imports may trigger farmer unrest, especially if MSP realization worsens.
Energy Security vs. Farmer Welfare
- India needs to balance:
- Meeting ethanol blending targets under its Net Zero and energy transition goals.
- Supporting rural incomes and agro-industry sustainability.
| UPSC Relevance GS2 – International Relations: India–US trade diplomacy, balancing geopolitical and domestic concerns. GS3 – Agriculture and Economy:Agro-industry competitiveness; Impact of import liberalization on farmer incomes; Biofuel policy and energy security. Possible Mains Questions Q. Discuss the implications of the India–US trade deal on India’s agri-processing industries, particularly in the context of ethanol blending and oilseed processing. |