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Picture Courtesy: Down to Earth

Context:

Amid rising demand for animal feed driven by increasing consumption of milk, eggs, meat and fish, India’s understanding with the United States has kept the ban on GM maize and soyabean but allowed limited imports of non-GM sorghum and DDGS. This creates a small entry point for US feed products, helping the domestic feed industry manage raw material shortages while cautiously protecting Indian farmers and the country’s GM policy stance.

Key highlights of the India - US trade deal:

Selective Market Opening: India has agreed to limited market access for specific US agricultural feed products while avoiding a broad-based liberalisation of its sensitive farm sector.

Retention of GM Restrictions: India has maintained its regulatory position by continuing the ban on imports of genetically modified maize and soyabean, thereby safeguarding its precautionary approach toward GM crops.

Window for Alternative Feed Imports: The agreement permits the import of non-GM red sorghum and Distillers’ Dried Grains with Solubles (DDGS), creating a targeted entry point for US participation in India’s animal feed market.

Addressing Feed Supply Constraints: The limited opening is intended to help the domestic feed industry manage shortages, stabilise input prices, and support the growing demand for livestock, poultry and aquaculture products.

Protection of Domestic Agriculture: By restricting access to select products rather than core crops, India seeks to balance industry requirements with the need to protect farmer incomes and domestic production.

Strategic Trade Engagement: The arrangement reflects a calibrated bilateral approach that reduces trade friction with the United States while preserving policy autonomy in agriculture, food safety and biotechnology regulation.

India - US trade relations:

Record Growth in Bilateral Trade: Economic ties between India and the United States have strengthened significantly, with total bilateral trade reaching about USD 132 billion in FY25, marking a notable rise from the previous year and reflecting deepening commercial engagement.

Sustained Trade Surplus for India: India continues to enjoy a favourable trade balance with the US, recording a surplus of over USD 40 billion in FY25, highlighting the competitiveness of Indian exports in the American market.

Import Profile from the United States: India’s key imports from the US are concentrated in high-value and strategic sectors, including crude oil and petroleum products, precious stones and metals, industrial machinery, nuclear reactors, and electrical equipment, which support domestic manufacturing and energy needs.

Export Strengths to the US Market: India’s exports are driven by diversified sectors such as electrical and electronic goods, gems and jewellery, pharmaceuticals, engineering products, petroleum products, and iron and steel articles, indicating strong industrial and value-added capabilities.

Investment Partnership: The United States remains a major source of long-term capital, ranking among the top foreign investors in India, with cumulative Foreign Direct Investment inflows exceeding USD 70 billion between 2000 and 2025.

Strategic Economic Framework: To further deepen economic and strategic cooperation, the two countries launched the US-India COMPACT (Catalyzing Opportunities for Military Partnership, Accelerated Commerce and Technology) in 2025, under which the Mission 500 initiative aims to expand bilateral trade to USD 500 billion by 2030, supported by ongoing negotiations for a comprehensive Bilateral Trade Agreement (BTA).

Significance of the farm trade deal:

For India:

Managing feed demand pressures: The agreement allows limited imports of sorghum and DDGS, helping India address emerging shortages in feed ingredients as demand rises with the expansion of the dairy, poultry and aquaculture sectors.

Stabilising input costs: Access to additional feed sources can moderate price volatility in maize and protein substitutes, improving cost efficiency for the livestock and poultry industries and supporting overall food inflation management.

Supporting nutritional transition: By strengthening feed availability, the deal indirectly supports increased production of milk, eggs, meat and fish, aligning with India’s shift toward protein-rich diets.

Protecting domestic agriculture: India has retained its ban on genetically modified maize and soyabean, ensuring that farmer livelihoods, biosafety concerns and policy autonomy remain safeguarded.

Calibrated trade liberalisation: The selective opening reflects a cautious strategy—meeting supply gaps without exposing core crops to large-scale import competition.

For United States:

Access to a large emerging market: India’s rapidly expanding demand for animal feed offers significant long-term export potential for US agricultural products such as sorghum and DDGS.

Diversification beyond traditional markets: The deal helps the US reduce dependence on a limited set of buyers by expanding its presence in one of the world’s fastest-growing agricultural demand centres.

Building a strategic trade foothold: Even limited access allows US exporters to establish supply chains, industry linkages and market familiarity, which could support future negotiations for broader agricultural access.

Value addition through by-product exports: The export of DDGS, a by-product of ethanol production, strengthens the economic viability of the US biofuel industry by creating additional overseas demand.

Current status of feed market in India:

• According to the Compound Livestock Feed Manufacturers Association of India (CLFMA), India’s compound feed production is estimated at around 60 million tonnes, reflecting the growing importance of the sector in the livestock economy.
• The market is dominated by poultry feed at about 40 million tonnes, followed by 18 million tonnes of cattle feed and nearly 2 million tonnes of aqua feed, indicating the central role of poultry in the organised feed segment.
• United States Department of Agriculture (USDA) has projected a sharp increase in India’s feed demand, driven by higher consumption of animal products as incomes rise and diets diversify.

Challenges of the farm trade deal:

• Rising import dependence risk: As India’s demand for animal feed expands rapidly, projections by the United States Department of Agriculture indicate that the country may need to import about 11 million tonnes of maize and 6 million tonnes of soyabean meal by 2040, suggesting that even limited openings today could gradually increase long-term dependence on foreign supplies.
• Pressure on domestic crop prices: Since India currently produces around 43 million tonnes of maize and 12–13 million tonnes of soyabean annually, the availability of imported alternatives such as sorghum and distillers’ grains may soften domestic prices during surplus periods, thereby affecting the incomes of small and marginal farmers.
• Precedent for broader market access: Although the present agreement allows only selective products, it may strengthen future demands for wider entry of American crops, especially given that the United States produces nearly 425 million tonnes of maize and 120 million tonnes of soyabean, far exceeding India’s production capacity.
• Regulatory and biosafety concerns: The import of distillers’ dried grains with solubles, which are derived from genetically modified maize, creates additional challenges related to testing, traceability and compliance in order to maintain India’s biosafety and food safety standards
• Uneven distribution of gains: While the organised feed sector valued at over ₹1.7 lakh crore with annual production of about 60 million tonnes, is likely to benefit from lower input costs, the advantages may be concentrated among large poultry and dairy integrators rather than primary crop producers.

Way forward:

• Enhancing domestic productivity to reduce import dependence: Given that India’s maize yield is only about 3.7 tonnes per hectare compared to over 11 tonnes per hectare in the United States, sustained investment in high-yielding seeds, irrigation, mechanisation and climate-resilient practices is essential to bridge the productivity gap and meet the growing feed demand domestically.
• Expanding feed crop diversification: As demand for animal feed rises sharply, promoting alternative crops such as sorghum, millets and oilseed meals through minimum support mechanisms, extension support and assured market linkages can reduce excessive reliance on maize and imported substitutes
• Strengthening research and extension systems: Institutions such as the Indian Council of Agricultural Research should prioritise region-specific varieties, pest-resistant hybrids and improved agronomic practices, while improving last-mile technology transfer to farmers.
• Developing a balanced import policy framework: Imports should remain calibrated and need-based, with safeguard mechanisms such as tariff triggers, quantity limits and periodic reviews to prevent sudden price shocks to domestic farmers.

Conclusion:
The India–United States farm trade arrangement adopts a calibrated approach that addresses rising feed demand through limited and need-based imports while safeguarding domestic farmers and regulatory autonomy, but its long-term sustainability will depend on strengthening domestic productivity, improving feed crop resilience and ensuring that growing import dependence does not weaken farmer incomes or agricultural self-reliance.

Source: Down to Earth