US pressurizes India to allow import of ethanol
26-May-2025 05:32 PM
Mumbai. During ongoing bilateral trade talks, the United States is exerting strong pressure on India to allow the import of genetically modified (GM) corn and soybean, along with ethanol and DDGS (Distillers Dried Grains with Solubles).
This move could have significant repercussions for India's sugarcane and grain-based ethanol industries. Several rounds of discussions have taken place between the two countries regarding a bilateral trade agreement, and reports suggest that the first phase of this agreement might be announced before July, ahead of the implementation of a new tariff regime in the US.
If the Indian government permits the import of American ethanol and DDGS, it could adversely affect the interests of Indian corn and sugarcane farmers, as well as domestic ethanol producers.
The Indian government has set a target to achieve 30 percent ethanol blending in petrol by 2030, and significant progress is being made toward that goal.
Improved ethanol production has supported maize prices, providing farmers with remunerative returns. Sugarcane farmers, too, have been receiving fair and timely payments.
The sugar industry has invested heavily in expanding ethanol distilleries, and grain-based ethanol plants are also growing in number. Allowing large-scale imports of cheaper US ethanol and DDGS could undermine these efforts and trigger a decline in domestic production.
The experience with edible oil imports serves as a warning. Once import controls were relaxed, imports soared, becoming a major challenge for the government and the economy.
A similar trend in ethanol could erode the competitiveness of Indian producers, reduce their interest in production, and eventually harm the sector.
Additionally, large imports of DDGS could suppress domestic prices of corn and soybean, as the demand for locally produced soymeal would decline. This could impact the income of the agriculture sector and disrupt the animal feed manufacturing industry.