India-US Interim Trade Agreement: Agricultural Implications Analyzed
India has not opened its market to imports of key American agricultural commodities such as soybean, corn, fuel ethanol, cotton, dairy, or poultry products, according to a joint statement on an interim bilateral trade agreement released by both nations. Instead, the agreement focuses on granting greater market access through the elimination or reduction of tariffs for other US farm produce.
Market Access for Specific US Products
India has agreed to lower tariffs on Distiller's Dried Grains with Solubles (DDGS), soybean oil, red sorghum for animal feed, tree nuts, fresh and processed fruits, and wine and spirits. On the surface, these concessions may not pose significant threats to Indian farmers due to limited domestic production in these areas. However, the implications are more nuanced than they appear.
Benefits for Livestock and Poultry Industries
DDGS, a byproduct of ethanol production from corn and other grains, is a protein-rich, low-cost alternative livestock feed ingredient. Currently, Indian poultry, cattle, and aqua feed manufacturers rely on more expensive de-oiled cake from soybean, cottonseed, groundnut, or rice bran.
Indian oilseed processors sell soybean DOC with 46% protein at Rs 43-44 per kg, while DDGS from rice with 42% protein costs around Rs 30/kg, and corn DDGS with 27% protein is priced at Rs 24-24.5/kg. Even after adjusting for protein content, DDGS is significantly cheaper, and imports from the US could further reduce costs.
Divya Kumar Gulati, chairman of CLFMA of India, highlighted that US corn DDGS has aflatoxin levels below 20 parts per billion, meeting safety thresholds, unlike Indian DDGS which often exceeds 100-200 parts per billion. This makes US DDGS suitable for broiler chickens and dairy cattle, potentially benefiting the poultry, dairy, and aqua industries with cheaper, higher-quality feed.
Potential Gains from Sorghum Imports
India's livestock sector could also benefit from reduced or zero-duty imports of red sorghum for animal feed. The US, the world's largest producer and exporter of sorghum, projects exports of 5.4 million tonnes for the 2025-26 marketing season, valued at over $1.6 billion in 2024.
Losses for Soybean Farmers and Processors
The main losers in this agreement are likely to be Indian soybean farmers and the processing industry, along with local ethanol distilleries that sell DDGS as a byproduct. Every 100 kg of soybean processed yields about 18 kg of oil and 82 kg of DOC. The trade deal allows imports of DDGS and lower-duty soybean oil, which could reduce domestic realizations for soybean DOC and oil.
This may hurt farmers cultivating soybean on approximately 13 million hectares, primarily in Madhya Pradesh, Maharashtra, and Rajasthan. India imported 4.8 million tonnes of soybean oil in 2024-25, mainly from Argentina, Brazil, Russia, and the US. With lower tariffs, US soybean oil imports could increase, impacting domestic prices.
Stand on GM Crops and Dairy Products
India has maintained its position against liberalizing imports of American corn or soybean, both genetically modified, and dairy products from cows fed on bovine-based ingredients. Consequently, more US produce may enter India as DDGS, ethanol, and sorghum.
Non-Tariff Barriers and Tree Nuts
The joint statement mentions India's commitment to address non-tariff barriers to US food and agricultural trade, though it remains unclear if this pertains to restrictions on GM crops and dairy products.
Import concessions on tree nuts, such as walnuts, almonds, and pistachios, are unlikely to harm Indian farmers significantly, as India is not a major producer. However, India is the largest market for American tree nuts, with US exports valued at $10 billion in 2025, of which India accounted for $1.5 billion. Duty reductions could further boost these imports.
Conclusion
This interim trade agreement presents a mixed bag for Indian agriculture. While the poultry, dairy, and aqua industries stand to gain from cost-effective, high-quality feed imports, soybean growers and processors face potential losses. The deal underscores India's cautious approach to protecting sensitive sectors while engaging in global trade dynamics.
