Why in News?

As India and the US push to finalise a bilateral trade deal before the July 9 deadline, two major Indian agri-industries are expressing concern.

The sugar industry opposes the import of ethanol and genetically modified (GM) maize for fuel blending, while the soybean processing industry is against GM soyabean imports.

It should be noted that the US is the world’s top producer as well as exporter of both maize and fuel ethanol. Also, it is the second biggest producer and exporter of soybean after Brazil.

With the US seeking new markets amid geopolitical shifts, pressure is mounting on India to ease import restrictions. However, these domestic sectors fear such concessions could hurt local producers.

What’s in Today’s Article?

• Ethanol Blending: A Policy Success
• Millers' Concerns Over Ethanol Imports
• India: A Key Market for US Ethanol
• Concerns of India’s Soyabean Industry

Ethanol Blending: A Policy Success

• India’s ethanol blending programme has grown significantly under the Modi government.
• Average ethanol blending in petrol rose from 1.5% (2013-14) to 14.6% (2023-24).
• In the current supply year (Nov 2024–May 2025), the blending ratio reached 18.8%, nearing the 20% target by 2025-26.
• Shift from Sugarcane to Grains
  • Since 2018-19, sugar mills have started using grains (especially maize and surplus rice) alongside molasses for ethanol.
  • In 2024-25, 68% of the 1,047.9 crore litres of ethanol is grain-based.
  • Maize alone contributes 483.9 crore litres, overtaking sugarcane-based sources.

Millers' Concerns Over Ethanol Imports

• Sugar millers are worried that sugarcane is losing importance as more ethanol is now being made from grains like maize.
• They fear that if India starts importing ethanol or genetically modified (GM) maize, sugarcane will be pushed aside even more.
• Since sugar consumption in India is not growing, millers see their future in energy—like ethanol-blended diesel or aviation fuel—rather than in producing sugar.
• Food vs Fuel Debate
  • Millers argue ethanol from sugarcane avoids food/feed conflicts.
    • Unlike maize, sugar isn’t a key livestock or poultry feed.
    • Diverting maize to fuel may strain supply for animal feed, affecting dairy, poultry, and egg sectors.

India: A Key Market for US Ethanol

• The US exported 724.5 crore litres of ethanol in 2024, with India as the third largest buyer (70.8 crore litres worth $441.3 million).
• India restricts ethanol imports to non-fuel industrial use and under licence.
• NITI Aayog Push for GM Maize Imports
  • A working paper suggests importing cheaper US GM maize for ethanol.
  • Its byproduct (DDGS - distiller’s dried grains with solubles) can be exported to avoid domestic feed concerns.
  • Authors claim this will help India meet biofuel targets without disturbing local food chains.

Concerns of India’s Soyabean Industry

• A NITI Aayog paper suggests importing soyabean, extracting oil for domestic use, and exporting the leftover GM-based de-oiled cake (meal).
• SOPA's Opposition to the Plan
  • The Soybean Processors Association of India (SOPA) rejects the proposal due to logistical and economic challenges:
    • Most solvent extraction units are located inland (MP, Maharashtra), far from ports.
    • Transporting imported beans from ports to plants and then exporting the meal is not cost-effective.
    • Such a policy threatens the livelihood of nearly 7 million soyabean farmers.
• Limited Domestic Demand vs. China
• India processes 11–12 million tonnes of soyabean yearly, with most meal used domestically for food and feed.
• Only ~2 million tonnes is exported, unlike China which crushes over 100 million tonnes annually for its massive livestock industry.
• Fears of Foreign Dominance
  • If GM meal cannot be sold domestically, processing must shift closer to ports for export.
  • This could invite dominance by global agri-trading giants (e.g., ADM, Cargill, Bunge, Louis Dreyfus), pushing out domestic processors.
• Import Duty Cuts Add Pressure
  • Recently, the Centre reduced the import duty on crude soyabean, palm, and sunflower oil from 27.5% to 16.5%.
  • SOPA fears this will undercut local processors by making imported oils cheaper, forcing many to shut or operate below capacity.
• Falling Soyabean Prices Hurt Farmers
  • Soyabean is currently trading at ₹4,300–₹4,350/quintal in MP and Maharashtra—well below the MSP of ₹5,328.
  • Cheap imports of oil or seed could further depress prices and cause farmers to shift to other crops.