What Happened
- The India-US interim trade framework reduces reciprocal tariffs on Indian goods entering the US from 50% to 18%, significantly benefiting India's seafood sector, particularly shrimp exports.
- India agreed to allow imports of up to 500,000 metric tons of Dried Distillers' Grains with Solubles (DDGS) from the US at reduced or zero duties, intended to lower feed costs for the poultry industry.
- Sensitive agricultural products including dairy, meat, poultry, soybeans, maize, rice, wheat, sugar, and GM food products have been kept out of the tariff concession list.
- Industry bodies and farmer organisations raised concerns that zero-duty DDGS imports could depress domestic corn and soybean prices, which were already trading 24-26% below MSP levels in October 2025.
- India's shrimp exports to the US had declined significantly after the 50% tariff imposition in August 2025; the new 18% tariff rate is expected to restore competitiveness against Vietnam and Indonesia.
Static Topic Bridges
Dried Distillers' Grains with Solubles (DDGS) and India's Ethanol Blending Programme
DDGS is a co-product of grain-based ethanol production, rich in protein and energy, widely used as animal feed. India's Ethanol Blended Petrol (EBP) programme aims for 20% blending of ethanol with petrol (E20). As grain-based distilleries expanded to meet this target, domestic DDGS production surged approximately 13-fold over two years to an estimated 5.5 million tons by 2025.
- India requires approximately 10.16 billion litres of ethanol annually to achieve E20 blending targets
- Grain-based distilleries supplied 1.81 billion litres of ethanol by mid-2024, with maize contributing 1.10 billion litres
- Grain-based ethanol capacity accounts for approximately 40% of total ethanol capacity
- Domestic DDGS production has grown from negligible levels to 5.5 million tons, creating a new revenue stream for distilleries
Connection to this news: The import of 500,000 metric tons of US DDGS at zero duty could undercut domestic DDGS prices, squeezing margins for grain-based distilleries that depend on DDGS revenue to make ethanol production viable, while simultaneously depressing prices of corn and soybean used as alternative animal feed.
India's Seafood Export Economy and the US Market
India is the world's largest shrimp exporter, and the United States is India's single largest seafood export destination. The sector is a major foreign exchange earner and supports millions of livelihoods in coastal states, particularly Andhra Pradesh, Gujarat, and West Bengal.
- India's marine product exports were valued at approximately $7.4 billion in 2024-25
- Shrimp accounts for roughly 70% of India's seafood export value
- The US market absorbs approximately 40% of India's shrimp exports by value
- After the 50% tariff imposition in August 2025, effective duties on Indian shrimp (including countervailing and anti-dumping duties) rose to as high as 58%
- The new 18% reciprocal tariff brings the effective rate down to approximately 26%
Connection to this news: The tariff reduction from 50% to 18% restores price competitiveness for Indian shrimp against key rivals Vietnam (20% tariff) and Indonesia, enabling exporters to regain lost market share and reduce inventory build-up from the high-tariff months.
Minimum Support Price (MSP) and Agricultural Price Distress
The MSP mechanism guarantees a minimum procurement price for 23 crops to protect farmers from market price volatility. When market prices fall below MSP, farmers face distress sales. Import liberalisation of competing products or substitutes can exacerbate this price gap.
- In October 2025, domestic soybean prices were Rs 3,942 per quintal, approximately 26% below the MSP
- Maize prices averaged Rs 1,821 per quintal, about 24% below the MSP
- The Commission for Agricultural Costs and Prices (CACP) recommends MSP based on production costs (A2+FL formula or C2 formula)
- Effective MSP implementation requires adequate procurement infrastructure, which remains uneven across states
Connection to this news: Farmer organisations argue that zero-duty DDGS imports, being a substitute for domestically produced animal feed from corn and soybean, could further widen the gap between market prices and MSP for these crops, adding to the existing price distress.
Key Facts & Data
- Reciprocal tariff on Indian goods reduced from 50% to 18%, effective 7 February 2026
- DDGS import cap under the deal: 500,000 metric tons
- India's domestic DDGS production: approximately 5.5 million tons (2025)
- Soybean prices in October 2025: Rs 3,942/quintal (26% below MSP)
- Maize prices in October 2025: Rs 1,821/quintal (24% below MSP)
- Indian shrimp effective duty in US dropped from ~58% to ~26%
- Feed costs constitute 60-70% of total production expenses in India's ~$30 billion poultry sector
- Protected agricultural items: dairy, meat, poultry, soybeans, maize, rice, wheat, sugar, millets, GM products