What Happened
- As India and the US advance trade deal negotiations, the agriculture sector has emerged as the most sensitive area requiring careful calibration on the Indian side
- Key pressure points include: dairy products, genetically modified (GM) crops and derived products (such as distillers' dried grains with solubles — DDGS), poultry, and certain oilseeds (soybeans, maize)
- India has maintained a long-standing policy of not opening up its dairy market in free trade agreements, citing differences in production standards and cultural sensitivities around milk sources (US dairy cattle are often fed non-vegetarian diets)
- Farmer organisations have raised concerns over reduced import tariffs on US soybeans, soybean oil, and DDGS (a GM corn by-product used as animal feed), fearing price depression of domestic crops
- India successfully kept GM crops and dairy outside the scope of the India-US interim trade framework announced by Prime Minister Modi and President Trump; however, pressure for further concessions continues
- India's agricultural exports to the US are also at stake — India aims to expand exports of rice, spices, marine products, and processed foods
Static Topic Bridges
India's Position on GM Crops and Food Safety
India has one of the world's most stringent regulatory frameworks for genetically modified organisms (GMOs). The Genetic Engineering Appraisal Committee (GEAC) under the Ministry of Environment, Forest and Climate Change is the apex body for approval of GM crop varieties for environmental release. Currently, only Bt cotton (approved in 2002) is commercially cultivated in India; all GM food crops remain unapproved for cultivation, though some are under field trials (Bt brinjal, GM mustard). India does not permit imports of GM food for human consumption.
- Regulatory body: GEAC (Genetic Engineering Appraisal Committee) under MoEFCC
- Only approved GM crop for cultivation: Bt cotton (2002); GM food crops not approved
- India's stance: permits processed GM derivatives for animal feed (with conditions) but not GM food imports
- DDGS (Distillers Dried Grains with Solubles): by-product of US ethanol production from GM corn; US pushes for Indian market access as animal feed
- Farmer groups' concern: DDGS imports would indirectly allow GM corn by-products into India's food supply chain
- WTO Agreement on Sanitary and Phytosanitary (SPS) Measures: allows countries to set domestic safety standards, but standards must be science-based and non-discriminatory
Connection to this news: India's refusal to open the GM food/feed channel is both a food safety and a farmer livelihood issue — cheap US GM corn derivatives could undercut India's 600 million+ rural population dependent on agriculture.
India's Dairy Sector: Scale, Sensitivity, and Trade Policy
India is the world's largest milk producer, accounting for approximately 23% of global milk production (~230 million tonnes per year as of 2025). The sector supports an estimated 80 million dairy farmer households, predominantly smallholders in rural India. India's dairy cooperatives (led by AMUL under GCMMF) and private dairies process and distribute milk nationally. India does not import significant quantities of dairy — import tariffs on most dairy products range from 30–60%, and India has consistently excluded dairy from FTA concessions.
- India's milk production (2024-25): ~230 million tonnes (world's largest producer)
- Dairy farmer households: ~80 million, mostly small and marginal
- AMUL (GCMMF): world's largest dairy cooperative federation; turnover ~Rs 80,000 crore
- Import tariff on dairy: 30–60% (basic customs duty); effectively prohibitive
- Cultural sensitivity: US dairy cattle fed non-vegetarian diets (animal by-products) — unacceptable to many Hindu and Jain consumers
- India's FTA track record: excluded dairy from ASEAN FTA, Japan FTA, and proposed RCEP
Connection to this news: The US is pushing India to reduce dairy tariffs as part of a broader trade deal; India's refusal is strategically linked to protecting 80 million farmer households and cultural food standards, making dairy concessions politically non-negotiable.
India-US Trade Relations: Structure and Bilateral Interests
India and the US are among the world's largest trading partners. Bilateral merchandise trade stood at approximately $130 billion in FY2025, with India running a trade surplus of ~$35–40 billion. The US is India's single largest export destination (receiving ~18% of India's exports). Key Indian exports: gems and jewellery, pharmaceuticals, IT services (services not included in merchandise), engineering goods, textiles. Key US exports to India: defence equipment, crude oil, LNG, aircraft, semiconductors, agricultural commodities.
- India-US bilateral trade (FY2025): ~$130 billion (merchandise)
- India's trade surplus with the US: ~$35–40 billion
- US tariff on Indian goods (pre-IEEPA): average ~3%; with "reciprocal" tariff: up to 26%
- India's tariff on US goods: average ~13% (one of the highest among large economies, per US data)
- Generalised System of Preferences (GSP): India lost GSP benefits in 2019; reinstatement discussed in trade talks
- India-US interim trade deal announced (early 2026): India to reduce tariffs on US goods; US to fix Indian exports at 18% tariff
Connection to this news: Agriculture is the most asymmetric sector in India-US trade — India has little to gain from opening its farm market (it already has surpluses) but much to lose in farmer livelihoods, making it the hardest sector to trade away for gains in other areas like IT services or pharmaceuticals.
Key Facts & Data
- India's milk production: ~230 million tonnes/year — world's largest producer (~23% of global supply)
- Dairy farmer households in India: ~80 million
- AMUL (GCMMF) annual turnover: ~Rs 80,000 crore
- India-US bilateral merchandise trade (FY2025): ~$130 billion
- India's trade surplus with US: ~$35–40 billion
- GEAC: apex GM regulatory body under MoEFCC
- Bt cotton: India's only approved GM crop for cultivation (approved 2002)
- India successfully kept dairy and GM crops outside the interim India-US trade framework (2026)
- DDGS: key US demand item (GM corn by-product used in animal feed); India cautious on allowing imports