4 red lines in India-US trade talks: Corn, ethanol, soyabean & dairy

United States President Donald Trump has said his administration is going to sign “a very big” trade deal “to open up India”, “where we are able to go in and compete (with) much less tariffs”.

India has maintained that agriculture and dairy are its “red lines” in its ongoing negotiations with the US. “There’s no way we could do anything that would weaken our agriculture, our farmers’ positions,” Finance Minister Nirmala Sitharaman said in an interview with the Financial Express.

What are these “red lines” that the US is testing and driving a hard bargain to circumvent, if not remove?

On these, India imposes both tariff and non-tariff restrictions, and the US is pushing for greater market access.

The first is corn

The US is the world’s biggest maize producer and exporter, with an estimated 377.6 million tonnes (mt) output, as against India’s 42.3 mt, in 2024-25.

As much as 94% of the total area planted to corn in the US last year was under genetically modified (GM) varieties. These incorporate alien genes from bacteria that code for proteins enabling the crop to “tolerate” application of herbicides such as glyphosate and glufosinate or resist attacks by specific insect pests.

India charges 15% duty on maize imports of up to 0.5 mt annually, with quantities beyond that attracting a higher 50% rate. Moreover, it neither grows nor allows import of GM maize.

One proposal mooted is to permit import of GM maize exclusively for use as a feedstock to manufacture fuel ethanol. Over 46% of the ethanol being made available by Indian distilleries for blending with petrol is, in fact, currently coming from maize.

That’s more than the share of other feedstocks: Sugarcane juice/molasses (32%) and surplus/broken rice (22%).

Maize is largely a feed grain supplying carbohydrates, the principal source of energy for poultry and livestock. Restricting the use of imported GM maize only to milling and the fermentation of its starchy carbohydrates into fuel ethanol is meant to prevent this material from entering the food chain. The milk, egg or chicken consumed in India will, then, not come from cattle and birds fed on GM maize, whether imported from the US or Brazil.

But the proposal faces resistance from sugar mills. The share of ethanol supplied from grain-based feedstock has risen from zero to 57% between 2017-18 and 2023-24. The mills fear that imported GM maize will lead to the further marginalisation of sugarcane in the ethanol-blended petrol (EBP) programme.

Opening the doors for GM maize imports may also encounter political roadblocks, ahead of the Bihar Assembly elections: The state is India’s third largest maize producer after Karnataka and Madhya Pradesh.

Explained

The challenge

Opening up imports of the four farm products is politically fraught: it involves farmers across several states, and calls for a relook at key policies regarding regulation around genetically modified crops.

The second is ethanol

The US is the world’s biggest producer and exporter of ethanol too. In 2024, it exported $4.3 billion worth of ethanol, with India being the third largest market (at $441.3 million) after Canada ($1.5 billion) and United Kingdom ($535.1 million).