Why these two agri industries are wary about India-US trade deal
Even as India and the United States work towards finalising a bilateral trade deal – ahead of a looming July 9 deadline for the reimposition of President Donald Trump's so-called reciprocal tariffs – at least two major domestic agricultural-based industries are worried about the possible concessions that a deal might entail.
The sugar industry, for one, is against allowing imports of ethanol for use in blending with petrol. The mills aren't also very keen on import of genetically modified (GM) maize/corn as a feedstock for fuel ethanol. The US is the world's top producer as well as exporter of both maize and fuel ethanol.
The second is the soyabean processing industry. The Indore-based Soybean Processors Association of India (SOPA) has vehemently opposed imports of soyabean. The US is the second biggest producer and exporter of this leguminous oilseed after Brazil. Both countries mostly grow GM soyabean.
Given the US' high stakes in these commodities – and the geopolitical imperative to find a sizeable alternative market to China – there's significant pressure on India to remove restrictions on their imports.
But any such opening up in the India-US trade deal could encounter resistance from the two well-established agro-processing industries.
What sugar millers fear
The ethanol-blended petrol programme has been a success story of the Narendra Modi-led government.
Chart 1 shows that the average blending of ethanol in petrol sold by oil marketing companies (OMC) has risen from just 1.5% in 2013-14 to 14.6% in 2023-24. In the current supply year, from November 2024 till May 2025, the cumulative all-India average blending ratio was 18.8%, close to the target of 20% by 2025-26.
But the industry's concerns are over the feedstock used for ethanol production.
Till 2017-18, the entire ethanol for blending in petrol came from molasses, the leftover dark syrup after extraction of sugar crystals from cane juice. From 2018-19, the mills-cum-distilleries also began using cereal grains (mainly broken or old rice unfit for human consumption) as feedstock. Since 2023-24, the ethanol supplies from grain-based feedstock, particularly maize, has overtaken that from sugarcane molasses and whole juice (Chart 2).
For the 2024-25 supply year, a total 1,047.9 crore litres of ethanol have been contracted or made available to OMCs. Out of that, 710.4 crore litres or nearly 68% is from grain-based feedstock, including 483.9 crore litres from maize, 119 crore litres from the Food Corporation of India's surplus rice and 107.5 crore litres from damaged/broken grains. Only the balance 337.5 crore litres are from molasses (144.7 crore litres) and sugarcane juice (192.8 crore litres).
'As it is, sugarcane is being marginalised as a feedstock. It would be worse with imports of maize or even ethanol itself,' says a miller from Uttar Pradesh.
According to him, the industry was already facing the prospect of stagnant, if not declining, domestic sugar consumption: 'Our future isn't sugar, but energy. Today, it is 20% ethanol-blended petrol. Tomorrow, it may be 5% blending in diesel or ethanol being converted through additional processing into sustainable aviation fuel producing lower carbon emissions compared to petroleum jet fuel'.
Ethanol from sugarcane, the miller claims, will not create any major 'fuel versus food and feed' dilemma. 'Sugar consumption won't increase much in India, unlike milk, egg and chicken that need maize as the key feed ingredient. The diversion of maize for biofuel will cause huge demand-supply imbalances and shortage of grain for livestock and poultry,' he adds.
The US exported a record 1,914 million gallons (724.5 crore litres) of ethanol, valued at $4.3 billion, in 2024. India was its third largest market (after Canada and the United Kingdom), at 187 million gallons (70.8 crore litres) worth $441.3 million. India permits import of ethanol only under licence for industrial (non-fuel) purposes and restricted to 'actual users': Imports can be for manufacture of alcohol-based chemicals, but not for blending in petrol or diesel.
A recent NITI Aayog working paper has suggested that India import GM maize as a feedstock for ethanol production. The protein-rich byproduct from it – DDGS or distiller's dried grains with solubles – may be entirely exported without getting consumed as a GM feed ingredient within the country.
'US corn is cheaper and can be used to meet India's biofuel targets without disrupting local food and feed markets,' the paper – authored by NITI Aayog member, Ramesh Chand, and senior adviser, Raka Saxena – has stated.
The NITI Aayog paper has also called for exploring the option of importing soyabean, with the oil extracted from it being sold in the domestic market and the residual de-oiled cake or meal (which contains GM protein matter) exported to other countries.
SOPA's executive director, DN Pathak, counters this proposal. 'Most of our solvent extraction plants are in the interiors (especially Madhya Pradesh and Maharashtra) where the crop is grown. It's not feasible for them to bring imported soyabean from the ports, process it and then take back the meal for exports. The freight cost economics will simply not work. And what will happen to the 7 million-odd farmers cultivating soyabean here?,' he asks.
Indian processors crush 11-12 million tonnes (mt) of soyabean annually to produce 9-9.5 mt of meal. Out of that, 7-7.5 mt is domestically consumed as feed and food ingredient and the rest 2 mt or so exported. This is way below the 105-110 mt that China crushes every year. Much of that soyabean is imported to meet the feed requirement of its humungous swine herd and poultry flock: China is home to roughly half of the world's pig population and a fifth of its chickens.
'We don't have this kind of domestic market for soyabean meal. Also, if the GM meal cannot be sold within the country, the processing plants will have to be nearer to the ports for exports. The ones more likely to put up these are the international commodity trading giants such as AWL Agri Business (formerly Adani Wilmar), Archer Daniels Midland, Bunge, Cargill and Louis Dreyfus,' explained Pathak.
SOPA has also voiced concern at the Centre's decision, on May 30, to slash the effective import tariff on crude soyabean, palm and sunflower oil from 27.5% to 16.5%. That will further squeeze the margins of domestic processors, 'as they will have to compete with lower-priced imported oils, forcing them to operate below break-even capacity or shut down altogether'.
Soyabean is now trading in MP and Maharashtra's mandis at Rs 4,300-4,350 per quintal, as against its official minimum support price of Rs 5,328. A surge in imports, whether of oil or seed, can lead to farmers switching acreage to other crops.
These worries may to come to the fore, as the ongoing trade talks between India and US edge closer to fruition.
Harish Damodaran is National Rural Affairs & Agriculture Editor of The Indian Express. A journalist with over 33 years of experience in agri-business and macroeconomic policy reporting and analysis, he has previously worked with the Press Trust of India (1991-94) and The Hindu Business Line (1994-2014).
... Read More
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Indian Express
19 minutes ago
- Indian Express
‘This is an outright war crime': Protests erupt in US and other countries after Trump's strikes on Iran
Anti-war protests broke out in multiple US cities, including San Francisco, New York, and Washington, DC, over the weekend following US airstrikes on Iranian nuclear facilities. Demonstrators criticised what they called an 'unconstitutional' escalation and warned of a wider Middle East conflict. Meanwhile, President Donald Trump and administration officials defended the attacks and warned of further action if Iran retaliates. Hundreds of demonstrators marched through San Francisco's Market Street, demanding an end to US military intervention in Iran. 'Trump has bombed Iran three times. This is an outright war crime,' said one protest speaker, according to ABC News. Similar protests unfolded in Washington, DC, New York, and Boston, with demonstrators holding placards and chanting slogans. Many rallies were organised by the ANSWER Coalition and the Party for Socialism and Liberation. It also posted on X: 'The people of the United States don't want another forever war. The people of the United States want money for people's needs!' 'We need to show face and come out in mass and show our administration we're not going to be fooled,' said Ramsey Robinson of the Party for Socialism and Liberation in San Francisco. 'We are anti-war. We support the Iranian people. We want to prevent more death, more destruction.' Activist Deliliah Shenk from Colma said she joined the protest after learning that the US used 'bunker buster' bombs in the attack. 'This is absolutely insane. It's totally unconstitutional. This guy needs to be given the boot. In a big way,' she told ABC News. Some groups also used the protests to voice support for regime change in Iran, holding separate demonstrations on the issue. The ANSWER Coalition has planned a national 'Stop the War on Iran' march for June 28 in Washington, DC, with more local demonstrations scheduled throughout the week. Protests also occurred globally, including in Japan and Iran. Trump defended the decision to bomb three Iranian nuclear facilities and warned of further action. 'If peace does not come quickly, we will go after those other targets with precision, speed and skill,' he said during a White House address. Vice President JD Vance also reinforced the administration's stance in an interview with ABC News, stating, 'If they decide they're going to attack our troops or build a nuclear weapon, we're going to respond to that with overwhelming force.' The strike drew mixed reactions from US Congress. While some Republican lawmakers praised the move, Democrats were sharp in their criticism. According to the World Socialist Web Site, a broader wave of anti-war protests has also erupted in elsewhere across the globe, including Europe and Asia. In Europe, tens of thousands have taken to the streets in cities like The Hague, London, and Brussels, condemning violence in Gaza and opposing their governments' support for US-Israeli policies. Large protests have also been reported in Morocco, South Africa, Somalia, and Portugal. Many of these demonstrations include calls for a ceasefire and critiques of imperialism and foreign intervention. Protests have also spread across Asia, including Japan and Iran, where citizens voiced opposition to war and regional escalation. Pakistan also witnessed demonstrations. In Karachi, thousands of people protested against the US and Israeli airstrikes on Iran, reported Reuters. Demonstrators symbolically walked over a large American flag with Trump's image, expressing strong opposition to the bombings authorised by Trump against Iranian nuclear sites. (With inputs from USA Today, ABC News, World Socialist Web Site, Reuters)
Economic Times
22 minutes ago
- Economic Times
Higher crude oil prices a net positive for upstream cos, possibly for OMCs too: Kotak Equities
The recent rise in crude oil prices may prove beneficial not only for upstream oil companies but also for oil marketing companies (OMCs), according to a report by domestic brokerage firm Kotak Institutional Equities. ADVERTISEMENT In a recent note, the brokerage highlights that the latest rally in oil prices, with Brent crude being up 15% since early June, could aid upstream companies such as ONGC and Oil India by lifting their net realizations and earnings. "Brent has moved up to US$85/bbl from US$74/bbl earlier in the month," the brokerage said, adding that every US$1/bbl increase in Brent prices adds Rs 2.4–2.5/share to ONGC's EPS and Rs 3.5–4/share to Oil India's EPS, assuming no changes in government levies. According to Kotak, ONGC's base case assumes an oil price of US$80/bbl Interestingly, the brokerage also sees the potential for OMCs to benefit from higher oil prices under current market conditions. 'Oil marketing companies (BPCL, HPCL, IOCL) may benefit too, if the government maintains current pump prices,' Kotak stated. The report notes that despite the recent increase in Brent prices, auto fuel prices have remained unchanged in India, implying potential margin expansion for OMCs. ADVERTISEMENT "OMCs are seeing marketing margins rise to Rs 5.6/liter for diesel and Rs 7/liter for petrol," the report stated, assuming average Brent at US$85/bbl and a USD/INR exchange rate of Kotak points out that HPCL's marketing EBITDA was Rs 3.5/liter in FY24, suggesting that current margin levels may offer substantial upside if they persist. The firm acknowledges that while refining margins remain modest, the improving marketing profitability may offset those concerns. ADVERTISEMENT On refining, the brokerage notes that gross refining margins (GRMs) continue to be relatively weak, with Singapore complex GRM currently at US$3.5–4/bbl, and diesel cracks at US$13–14/bbl, which are below seasonal averages. Also read: HDB Financial Services GMP at 6.3% ahead of IPO. What should investors do? ADVERTISEMENT Nevertheless, the note emphasizes that product cracks are not as weak as GRMs suggest, and that the margins are still acknowledging the volatility in the crude market, Kotak Institutional Equities underlines that higher oil is unequivocally good for upstream companies and may not hurt OMCs in the near term either. ADVERTISEMENT The brokerage firm also stated that it continues to prefer ONGC and Oil India among upstream players and maintains a 'buy' rating on both stocks. (Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times) (You can now subscribe to our ETMarkets WhatsApp channel)
Time of India
24 minutes ago
- Time of India
Blood, bombs and a Nobel? Pakistan chokes on Trump nomination after US bombs Iran
What began as a bold diplomatic gesture, Pakistan recommending former US President Donald Trump for the Nobel Peace Prize, has quickly turned into a political embarrassment. The move, announced Friday and formalised through a letter signed by Deputy Prime Minister and Foreign Minister Ishaq Dar, cited Trump's self-proclaimed efforts in preventing escalation during the recent India-Pakistan standoff. But within hours, the US bombed three of Iran's key nuclear facilities- Fordo, Isfahan, and Natanz- in a joint operation with Israel. That single event has flipped the narrative and ignited widespread condemnation inside Pakistan. 'Afghan blood is on his hands' Critics point not just to Trump's recent actions but to his broader legacy of war and destabilization. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Join new Free to Play WWII MMO War Thunder War Thunder Play Now Undo 'How can a man with the blood of Afghans and Palestinians on his hands claim to be a peacemaker?' asked Maulana Fazlur Rehman , leader of the Jamiat Ulema-i-Islam (JUI-F), at a party event in Murree. He demanded the government withdraw Trump's nomination immediately. Fazl slammed Trump's history of supporting Israeli military operations across Palestine, Syria, Lebanon—and now Iran. 'Trump's claim of peace has proven to be false,' he said, adding that the nomination appeared to be driven by Pakistani leaders' enthusiasm over Trump's lunch meeting with Chief of Army Staff, Field Marshal Asim Munir. Live Events Political outrage mounts Voices from across Pakistan's political spectrum have joined the backlash. Former senator Mushahid Hussain said on X: 'Since Trump is no longer a potential peacemaker, but a leader who has willfully unleashed an illegal war, Pakistan government must now review, rescind and revoke his Nobel nomination!' He further accused Trump of being manipulated by 'Netanyahu and the Israeli war lobby,' and warned that the former US president had committed the 'biggest blunder of his presidency.' 'National embarrassment' Pakistan Tehreek-i-Insaf (PTI) was among the first to formally condemn the US strikes, labeling them 'unprovoked' and expressing 'total support' for Iran's sovereignty. Raoof Hasan, head of PTI's political think-tank, called the Trump nomination a 'cause of unmitigated shame and embarrassment' and blasted the government for what he described as a misstep that undermines national legitimacy. Diplomats and Activists Speak Out The backlash extended beyond politicians. Former ambassador Maleeha Lodhi termed the decision 'unfortunate,' saying it failed to reflect public sentiment. Veteran politician Afrasiab Khattak described it as 'sycophancy,' unfit for responsible diplomacy. Jamaat-i-Islami chief Naeemur Rehman said the move 'undermines our national dignity,' while author Fatima Bhutto posed a pointed question on X: 'Will Pakistan withdraw its nomination for him to receive the Nobel Peace Prize?' A diplomatic blunder? The backlash highlights a deeper discomfort with aligning Pakistan's foreign policy narrative with a figure whose record includes drone strikes, Middle East escalation, and backing regimes accused of war crimes. As journalist Mariana Baabar noted, 'Today Pakistan does not look too good either,' sharing the official post announcing the nomination.
