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Informist, Saturday, Feb. 7, 2026

 

By Pallavi Singhal

 

NEW DELHI – Details of the trade deal disclosed by India and the US in a joint statement Saturday indicate that New Delhi has decided to sharply reduce or eliminate most-favoured nation tariffs on a wide range of US agricultural products, including soybean oil, dried distillers' grains with solubles, and fresh fruits. The move is seen intensifying the pressure on domestic oilseeds and ethanol-linked by-products, particularly if import quotas or safeguards are not introduced, traders and analysts said.

 

Tariff reductions on US fresh fruits--particularly apples--and on soybean oil are likely to hurt Indian farmers and could face strong resistance from farmer groups, Global Trade Research Initiative said in a note. It added that it remains unclear which "additional agricultural products" have been included for tariff cuts beyond those already disclosed, the New Delhi-based trade think tank said.

 

The US has effectively traded relief from what it described as "unsustainable and illegal reciprocal tariffs" for permanent market-access gains in India, the note said. "Taken together, while the US has eased tariffs, it has secured far-reaching commitments from India on agriculture, regulation, digital policy, security alignment and large-scale purchasing concessions that go well beyond trade," the think tank said.

 

The concerns come at a time when India is already heavily dependent on edible oil imports while simultaneously pushing an ambitious ethanol-blending programme, a strategy that has significantly expanded domestic dried distillers' grains with solubles supply and affected the country's oilseed economics. 

 

India has rapidly scaled up grain-based ethanol capacity, with maize and surplus rice increasingly used alongside sugarcane. Every tonne of grain processed for ethanol yields roughly 30–33% dried distillers' grains with solubles, turning ethanol distilleries into a major and growing source of animal feed.

 

As ethanol output has risen over the past few years, the availability of domestic dried distillers' grains with solubles has increased sharply, particularly in maize-producing regions. The resulting supply surge has already softened prices of dried distillers' grains with solubles, benefiting poultry, dairy and feed manufacturers by lowering feed costs. Dried distillers' grains with solubles compete directly with soymeal, rapeseed meal, and groundnut cake.

 

This cheaper availability of the by product has displaced demand for oilmeals, as feed formulators substitute towards the lower-cost protein source. This substitution has exerted downward pressure on oilmeal prices, squeezing crushing margins for oilseeds, thus lowering realisations for oilseed farmers.

 

With the deal, oilmeal prices are likely to fall further and feed quality may improve, but economics will become less favourable for domestic producers as dried distillers' grains with solubles prices decline, agriculture economist Deepak Pareek said. Maize prices are expected to soften, while oilseeds--especially soybean--would suffer if soybean oil imports are allowed at zero duty, making crushing unviable, he added.

 

Zero-duty soybean oil imports from the US could severely disrupt the domestic soybean value chain, as cheaper imported oil would cap domestic prices and squeeze crusher margins, Pareek said. "If soy oil from the US comes in at zero duty, it means the soybean ecosystem collapses," he said.

 

The soybean sector is already under stress, with weak soymeal exports, falling domestic demand, and subdued edible oil prices triggering a sharp price slump. Downward pressure on both soyoil and soymeal realisations has made it difficult for soybean prices to remain firm.

 

Soymeal exports in December fell nearly 59% on year to 114,697 tonnes due to relatively uncompetitive prices, according to data from the Solvent Extractors' Association of India. In April–December, exports declined 16% on year to 1.25 million tonnes, while domestic demand for soymeal also remained tepid, the industry body said.

 

Some industry participants, however, downplayed the likely impact. India already imports around 5 million tonnes of soybean oil annually, limiting the marginal effect of sourcing some volumes from the US, said Sandeep Bajoria, chief executive officer of Sunvin Group.

 

While Commerce Minister Piyush Goyal said in his briefing on Saturday that soybean oil imports from the US would be quota-based, the market impact will depend on the quantum allowed. "Getting some quantity from the US will not be a major problem. If a quota is fixed around 200,000 tonnes, it is manageable," Bajoria said. 

 

However, the imports of dried distillers' grains with solubles, which will come at nil duty, could depress prices further for Indian oilseeds at a time when domestic output of the by-product is already rising due to ethanol production from corn, Bajoria cautioned.

 

"As it is, we are producing a lot of dried distillers' grains with solubles domestically when we make ethanol from corn. Additional imports will add pressure," Bajoria said, adding that he does not see a drastic effect on Indian agriculture overall.   

 

Traders await further clarity on the deal, as concerns also centre on import duties on pulses such as yellow peas and lentils, which, if lowered, could trigger a significant inflow of shipments from the US into India.  End

 

Edited by Deepshikha Bhardwaj

 

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