Overview
The United States and India have published an interim framework intended to lower tariffs, reshape aspects of their energy relationship and deepen economic cooperation as both countries seek to reorient global supply chains. The joint statement on the deal indicates New Delhi resisted Washington's push for a wide opening of India's agricultural market, yet agreed to reduce trade barriers on several farm products - a decision that has prompted criticism from farmers and opposition parties.
Protein feed and the poultry sector
Under the framework, India is expected to permit imports of distillers dried grains with solubles, or DDGS, from the United States. DDGS is a protein-rich byproduct of ethanol production from corn and other grains, and greater imports are likely to add to existing surpluses in the domestic market.
Higher DDGS availability could be beneficial for India's poultry industry, estimated at nearly $30 billion, where feed makes up roughly 60-70% of production costs. Increased supplies of DDGS may reduce the need for more expensive feed purchases and thereby ease a major cost component for poultry producers.
Pressure on oilseed processors and soybean farmers
At the same time, domestic oilseed processors and soybean farmers face downside risks if U.S. DDGS imports rise. There are already surplus DDGS supplies in India that have weakened demand for traditional oilmeals such as soyameal. That reduced appetite has put downward pressure on Indian oilseed prices and has encouraged some farmers to shift planting away from soybeans and peanuts toward corn and rice, despite government efforts to increase oilseed cultivation and curb imports.
Further increases in DDGS availability could also affect India's ethanol sector. Ethanol producers have been operating with idle capacity and coping with slowing demand after the country reached a 20% biofuel blending target. Additional DDGS supplies may depress domestic DDGS prices and reduce earnings for ethanol producers who sell the byproduct in the local market.
Soyoil and tariff protections
Prospects of duty-free soyoil imports from the United States have raised concerns among stakeholders in India. The interim framework allows duty-free soyoil only within a tariff-rate quota, which means volumes above the quota will attract standard tariffs. That approach is designed to provide a degree of protection to domestic producers while permitting some concessional access.
Cotton imports and extra-long staple demand
India currently levies an 11% duty on cotton imports. Allowing duty-free cotton from the world's largest exporter of the fiber could put pressure on domestic cotton prices. However, the framework restricts the concession to extra-long staple cotton and limits it through a quota, which is expected to constrain the overall impact.
India is the world's second-largest cotton producer but does not fully satisfy its textile industry's demand for extra-long staple cotton. Suppliers for that variety include the United States, Egypt, Brazil and Australia, and the quotaed concession reflects this trade reality.
Apples, dry fruits and import safeguards
India ranks as the fifth-largest apple producer globally, yet domestic production does not fully meet rising consumer demand. The country imports around 500,000 metric tons of apples annually from Iran, Turkey, Afghanistan, the United States and Chile.
Under the interim arrangement, U.S. apple imports will be allowed at a concessional duty of 25% along with a minimum import price set at 80 rupees per kg. In practice, that minimum price effectively prevents shipments priced below 100 rupees per kg, a mechanism intended to shield Indian apple growers from undercutting by very low-priced imports.
Consumption of dry fruits such as walnuts, almonds and pistachios is also on the rise in India, but domestic production of these commodities is limited. Given those supply constraints, the framework's concessional treatment for dry fruits is not expected to materially harm local growers.
Winners among Indian producers
Certain Indian agricultural exporters stand to gain preferential access to the U.S. market. The United States has granted duty-free entry for products including tea, coffee, spices and certain fruits, which could expand export opportunities for those growers. In addition, the reduction of import duties on rice to 18% is anticipated to support exporters of premium basmati and non-basmati varieties.
Balance of protections and market openings
The interim framework represents a calibrated opening: selected concessions and tariff-rate quotas aim to allow some imports while using volume limits and minimum prices to protect domestic supply chains. Despite these safeguards, the package has generated political pushback given perceptions of increased competition for farmers and processors in affected sectors.
Where the framework will ultimately leave domestic prices, farm incomes and sectoral competitiveness depends on the scale of imports within quotas and market reactions, factors that will unfold as implementation details are finalized.