More Stories

Informist, Thursday, Jun. 26, 2025

 

By Pallavi Singhal

NEW DELHI – A recent paper by the NITI Aayog has called for lower import tariffs on various agricultural products, including corn, soybean derivatives such as seeds, oil, and meal, and rice. The move is part of a proposed trade deal aimed at increasing market access for US products. However, experts have criticised the proposal, saying it could disrupt markets and put the country's farmers at risk.

 

Lowering tariffs on staples such as rice, soybean, and corn could expose Indian farmers to volatile global prices, often influenced by heavily subsidised exports by the US and EU. This could lead to a situation in which Indian farmers are unable to compete, potentially disrupting the entire Indian agricultural sector.

 

Ajay Srivastava, founder of Global Trade Research Initiative, said India's past experiences with binding zero tariffs on rice and wheat under the General Agreement on Tariffs and Trade in the 60s and 70s left the country vulnerable and forced costly renegotiations. "Using trade policy to address short-term supply gaps can create long-term structural vulnerabilities that are hard to reverse," he said.

 

The NITI Aayog paper has suggested opening imports of genetically modified corn and soybeen seeds under strict controls. "We should explore the option of importing soybean seed and use it for extracting oil and... export meal for which there is adequate overseas demand. This will avoid GM feed into Indian market... Similarly, corn may be imported for ethanol blending and its by-product, like Distiller's Dried Grains with Solubles, can be entirely exported to avoid GM feed in the country," it said. 

 

However, experts say India's fragmented logistics and weak regulatory enforcement could make containment difficult. "Once genetically modified material enters the domestic chain, it risks contaminating local agriculture, creating trade disputes, and undermining public trust," Srivastava cautioned.

 

G.K. Sood, an agriculture expert, expressed concern about the impact of importing genetically modified soybean seed on Indian farmers. "The government cannot ensure that the meal produced from genetically modified soybeans does not get consumed by Indian cattle and get into the human food chain. It is impractical to say that hundreds of crushing plants can be policed by the government," Sood said. He also pointed out that the current minimum support price of soybean in India is INR 5,328 per 100 kg, while market prices are at INR 4,150 per 100 kg, even at the end of the season. "At such a time, allowing imports of soybean seed, which will land at INR 3,900 per 100 kg at Indian ports, would show an absence of any concern for Indian farmers," he said.

 

Srivastava recommended that India hold open, transparent consultations with state governments, farmer groups, and agricultural experts before making any binding commitments. "Agriculture affects half the population. Any major policy shift must be based on careful evidence, not rushed into to meet US demands," he emphasised.

 

Experts argue that tariff flexibility is essential to protect food security, support rural incomes, and respond to market shocks. "Once this flexibility is given up in a trade agreement, getting it back is extremely difficult," Srivastava said. The US, he said, had earlier used subsidised exports to disrupt global markets. "Between 2005 and 2008, and again in 2010–2011, global grain prices spiked sharply – wheat prices rose over 130% and maize nearly 70% – triggering food riots and forcing governments in countries like Ghana, Nigeria, and Senegal to resort to costly subsidies and emergency imports. Equally destructive, were the periods of artificially low prices that followed. From 2014 to 2016, global wheat prices fell below $160 per tonne, driven largely by surplus subsidized exports from the West. These low-price phases wiped out local cultivation incentives, leading to widespread farm abandonment and a dangerous dependence on imports," he said in a report. 

 

According to him, the cycle is vicious – cheap imports depress farmer incomes and reduce planting, while sudden price surges – often caused by droughts, conflicts, or export bans – lead to inflation, hunger, and political unrest. "This boom-bust dynamic has already dismantled Africa's once-resilient grain systems, India should not risk it," he said. 

 

In light of these concerns, the Delhi-based research body has urged the government to exercise caution and prioritise the interests of Indian farmers. In a report, it said that the government must carefully weigh the potential benefits of a trade deal against risks to the agricultural sector and the welfare of millions of farmers.  End

 

Edited by Avishek Dutta

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

 

Informist Media Tel +91 (11) 4220-1000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2025. All rights reserved.