US ag groups are cautiously optimistic about an interim US-India trade deal inked earlier this month. Officials have released a few details, but we do know that the deal involves India purchasing $500 billion worth of US goods over five years. For US agriculture, a White House fact sheet says the deal will reduce or eliminate tariffs and other trade barriers on a wide range of products, including dried distillers grains (DDGs), red sorghum for livestock feed, tree nuts, fresh and processed fruit, soybean oil, and certain pulses, among others. Officials are still hammering out the details, but the deal is expected to be finalized sometime in March.
According to the White House, India has maintained some of the highest tariffs on the United States of any major world economy, with tariffs as high as an average of 37% for agricultural goods and more than 100% on certain autos. India also has a history of imposing highly protectionist non-tariff barriers that have banned and prohibited many U.S. exports to India, says the White House.
India’s Trade Minister Piyush Goyal recently said that the deal protects “sensitivities” in agriculture and “excluded areas of high production in India, where we are generally self-sufficient: meat, poultry, rice, wheat, sugar, all dairy items, all GM products, soybean and corn.” Currently, India is the world’s largest milk producer and the second‑largest producer of rice and wheat. It is also a leading producer of pulses, oilseeds, sugarcane, cotton, jute, and coarse cereals such as millets. Additionally, India is a major producer of eggs, poultry meat, and farmed fish.
There is some confusion regarding India’s ban on GM-modified imports and the country’s plan to import US DDGS. For those not familiar, DDGS is derived from corn during the making of ethanol. Ethanol plants don’t typically distinguish between GM and non-GM corn. Meaning DDGS from these plants could be a mix of both. Indian officials have insinuated that a concession may be carved out for a small amount of DDGS. India has not imported US DDGS since 2022. Before that, the US shipped around 2,100 metric tons to the country annually.
Some in India’s poultry and dairy industries have said they could benefit from the increased availability of cheaper and probably better-quality DDGS. On the other hand, many Indian farmers’ groups fear even a small exception opens the door to future imports of GM foods and seeds.
US sorghum, which India has not imported since 1976, could also benefit. The country is expected to consume 4.75 MMT of sorghum in 25-26. Currently, US sorghum faces a 50% import tariff to India.
Additionally, a reduction in India’s 20% tariff on US soybean oil could help boost shipments there. Notably, India permits imports of soybean oil derived from GM soybeans as these are considered refined products rather than living modified organisms.
There are some important factors to understand about India’s $580 billion ag sector, as well. Unlike the US, agriculture is a foundational part of India’s economy. Agriculture and allied sectors (crops, livestock, fisheries, forestry) have contributed about 17–20% of India’s GDP in recent years. That compares to the US, where agriculture accounts for around 5.5% of the overall economy. More importantly, around 43–46% of India’s workers are employed in agriculture, making it the single largest source of employment in the country, especially in rural areas. In the US, the share is less than 2%.
With that context, it is easier to understand why Indian farmers view reduced trade barriers with the US as a huge threat to their livelihoods. Numerous farmers groups are pushing back hard, including plans for mass national strikes. It should also be noted that Indian farmers’ unions have a great deal of political sway in the country, and political opposition parties are already trying to capitalize on the discontent. In other words, there are a lot of things that could still derail the new US-India trade deal before it gets across the finish line. (Sources: Bloomberg, Argus, Indian Express, Times of India)
