India's grain sector resists US corn imports amid trade negotiations

Participants in India's agricultural and ethanol sectors are expressing reservations about potential corn imports from the US, as ongoing bilateral trade negotiations include discussions about purchasing US grain for ethanol production.

Industry stakeholders warned that such imports could undermine domestic farming ecosystems and the country's self-reliance.

This comes as India faces pressure from the Trump administration to open its markets to US agricultural products. In September, Commerce Secretary Howard Lutnick criticized India for not importing "a single bushel of corn" despite having 1.4 billion people.

Grain makes up more than half of ethanol production for blending in India.

Trade talks gain momentum

Trade negotiations have intensified since August, when the US imposed 25% punitive tariffs on Indian imports of Russian oil, bringing total duties to 50% when combined with existing measures.

During Commerce Minister Piyush Goyal's visit to Washington from Sept. 22-24, Indian officials acknowledged that "fresh offers have been made," including discussions to buy corn for ethanol production.This marks the first high-level engagement since the punitive tariffs were imposed, with the talks aiming to conclude at least part of a bilateral trade agreement by fall 2025, according to the officials.

However, domestic industry sources remain skeptical about the viability of such imports.

"The US is pushing India to import GMO corn, but India has resisted from the start. Using imported GMO corn for ethanol undermines us and keeps us reliant on energy imports, defeating the purpose of building domestic capacity and becoming a net energy exporter," Navneet Agarwal and Tushar Agarwal, directors at Maa Sheetla Ventures, said.

"Importing GMO corn threatens rice production, harms Indian farmers, and poses long-term risks to food security and the rural economy," they added.

Multiple sectors face potential impact

The concerns extend beyond corn producers to the rice industry, which could face significant disruption from increased corn availability.

Devasish Garg, vice president of the Indian Rice Exporters Federation, warned that importing low-cost US GMO corn would worsen India's struggle to offload nearly 44 million mt of surplus broken rice.

"With paddy procured at around Rupees 23/kg (10 cents/lbs) and final rice prices reaching Rupees 40/kg (18 cents/lbs), the burden falls on taxpayers. Cheaper GMO corn would undercut efforts to clear stocks and deepen economic strain," Garg added.

A Raipur-based ethanol producer said US corn imports would deeply affect India's rice industry, noting that corn byproducts and distillery linkages could disrupt existing supply chains.

"With rice prices stagnant amid weak demand, corn imports would further hurt farmers," the manufacturer said.

This concern comes against the backdrop of declining Indian rice prices, with Platts assessing Indian PB 5% at $339/mt FOB on Sept. 30, down $10 from the previous month, while 5% white rice fell $9 month over month to $366/mt FOB.

Indian ethanol faces overcapacity

The potential corn import discussions coincide with existing challenges in India's ethanol industry.Grain Ethanol Manufacturers Association President CK Jain recently said the 2025-26 (November-October) supply year could be "very difficult," with up to half the industry at risk of becoming non-performing assets due to overcapacity issues.

"Grain-based ethanol capacity has reached 18 billion liters, with 700 million more expected this year," said Jain, noting that demand remains at just 10.5 billion-11 billion liters. The underutilization hits smaller plants hardest, as 60% of India's capacity comes from 100-kiloliter/d units with higher production costs.

Conversion table: ethanol

Source: USDA

An Uttarakhand-based ethanol producer linked import concerns to crop impact, saying, "Maize imports affect both maize and rice. We don't use GMO crops — this poses a serious threat to Indian farmers."

Regulatory, economic barriers remain

Despite trade negotiation pressures, substantial barriers to US corn imports persist. India prohibits genetically modified crop imports, while 94% of US corn consists of GMO varieties.

The country's tariff structure imposes a 15% duty on corn imports up to 500,000 mt, with rates jumping to 50% beyond that threshold.

US corn costs around 70% of Indian corn prices even before shipping, raising dumping concerns that could impact domestic farmers, Platts analysis showed.

Ethanol co-product conversion rates

Source: USDA

The import substitution argument also carries weight in policy circles.India's ethanol blending program aims to save up to $10 billion annually in foreign exchange through domestic production, making corn imports potentially counterproductive to these objectives.

India, once a net corn exporter, now imports about 1 million mt annually amid rising ethanol demand. Still, domestic production is rebounding, with maize acreage up over 10% year over year at 2.31 million hectares in 2025, government data showed.