【India】India-US Interim Trade Agreement: Agricultural Safeguards and Market Access

India and the United States have issued a joint statement announcing the framework of an interim trade agreement. This announcement follows the US decision to reduce reciprocal tariffs on Indian goods to 18%. It is seen as a precursor to a full bilateral trade agreement. This framework provides India with preferential access to the $30 trillion US market. Its aim is to expand bilateral trade while ensuring the protection of Indian farmers and other sensitive sectors, even though India’s animal feed market has been partially opened to the US under this agreement.

Prohibited Items: In agricultural trade, India maintains a trade surplus of $1.3 billion with the US, with India’s exports at $3.4 billion and imports at $2.1 billion in 2024. The US will not impose any additional tariffs on Indian exports worth $1.36 billion.
Furthermore, a strict “Negative List” has been maintained. Under this, no tariff concessions have been granted to the US on the following sensitive agricultural products:

• Meat, poultry, and dairy products
• Major cereals (wheat, rice, corn, coarse grains/millets)
• Fruits and vegetables (banana, strawberry, cherry, citrus fruits, green peas)
• Other items, such as soybean, sugar, oilseeds, ethanol, and tobacco

GM Ban Continues: India has explicitly refused to open its markets for Genetically Modified (GM) products and has specifically blocked the entry of US GM corn and soybean.
Boost for Indian Farmers: India has secured duty-free access to the US market for several sectors, where in many cases tariffs have been reduced from 50% to 0%.

• Agricultural Exports: Indian spices, tea, coffee, cashews, Brazil nuts, and coconut (including oil and copra) have been granted access to the US market with zero duty.

• Fruits and Vegetables: Exports of mango, guava, papaya, avocado, banana, and mushroom will benefit from tariff elimination.
• Processed Items: Certain processed foods and select cereals like barley will also be imported duty-free, which will encourage pre-export value addition in India.

Domestic production of corn and soybean in India has not kept pace with the growing demand from the poultry and livestock sectors. In this context, this agreement provides some specific opportunities for animal feed imports while maintaining the ban on GM grains.

• Under this agreement, the United States can export sorghum (red sorghum) to India. This is considered a significant non-GM alternative to corn for the Indian poultry industry.
• Distillers Dried Grains with Solubles (DDGS): This is a by-product of ethanol production. Although it can be derived from GM corn, India is permitting it only as processed animal feed inputs. It meets the protein requirements for livestock and poultry without paving the way for the entry of GM grains.

For items for which the market has been opened, India has adopted effective measures to prevent dumping:

• Tariff Rate Quota (TRQ): Applied to items like apples and almonds, where imports at lower tariff rates will be allowed only up to a specified quantity.
• Phased Implementation: Some tariffs will be reduced gradually (over a period of up to 10 years) to give domestic industries sufficient time to adjust.
• Minimum Import Price (MIP): Applied to wine and spirits, ensuring only high-value premium products are imported and protecting the domestic mass-consumption-based industry.

Current Production: According to the United States Department of Agriculture (USDA), India’s annual corn production for 2025-26 is estimated to be around 43 million tonnes (mt), of which about 24 million tonnes is specifically allocated for animal feed use. Soybean production is around 12.5 million tonnes.
Combined Animal Feed Industry: Total combined animal feed production is estimated at about 60 million tonnes, including 40 million tonnes for poultry, 18 million tonnes for livestock, and 2 million tonnes for aqua/shrimp feed.
Domestic DDGS Supply: Grain-based ethanol distilleries in India are currently supplying over 3 million tonnes of DDGS to the animal feed industry, estimated to increase to 4.2 million tonnes by 2025-26.
Yield-Related Challenges: Domestic production is struggling with low yield issues. The average corn yield is about 3.75 tonnes per hectare (while in the US it is 11.25 tonnes per hectare), and soybean yield is less than 1 tonne per hectare (while in the US it is about 3.4 tonnes per hectare).

Drivers: Rising incomes, urbanization, an expected population reaching 1.5 billion by 2050, and dietary shifts towards protein (milk, eggs, meat) are increasing the demand for animal feed.
Consumption Projections (USDA Report):

• Corn: From 34.7 million tonnes (2022-23) to 93 million tonnes (2050) in a moderate growth scenario, or up to 200.2 million tonnes in a rapid growth scenario.
• Soybean Meal: From 6.2 million tonnes (2022-23) to 28.3 million tonnes (2050) in a moderate growth scenario, or up to 68.3 million tonnes in a rapid growth scenario.

Diet Composition: Corn is a key component, constituting 55-65% of broiler feed, 50-60% of egg-layer feed, and 15-20% of animal feed.

Due to India’s inability to increase production capacity in line with demand, the US is capable of filling this gap. The USDA estimates that under rapid growth scenarios, India may need to import approximately 46 million tonnes of corn and 19 million tonnes of soybean meal by 2040.