The United States is actively seeking greater access to the Indian market for three key agricultural commodities—soybean, corn, and cotton. This interest has grown in response to former US President Donald Trump’s calls for equal tariffs on Indian exports. Given that the US agricultural sector heavily depends on exports—amounting to nearly $62 billion in 2022—India presents a promising new market amid shifting global trade patterns.
Changing Trade Dynamics
For years, China has been the largest importer of US soybeans and cotton. However, between 2022 and 2024, Chinese purchases declined sharply:
- Soybean imports fell from $17.9 billion to $12.8 billion.
- Cotton imports dropped from $2.9 billion to $1.5 billion.
- Corn imports plunged from $5.2 billion to $328 million.
With China reducing its dependence on US agricultural goods, Mexico and Japan have emerged as dominant buyers of US corn. This shift has prompted the US to explore India as a potential new market for these crops.
India’s Growing Demand for Animal Products
A US Department of Agriculture (USDA) report suggests that India’s population growth and rising per capita GDP will fuel an increase in animal product consumption. This, in turn, will drive demand for livestock feed, particularly corn and soybean. Projections indicate that India’s domestic corn consumption could reach 98 million tonnes by 2040 and 200.2 million tonnes by 2050 under high-income growth scenarios.
Import Projections for Corn and Soybean
India’s potential imports of corn and soybean meal highlight a significant demand shift. If India experiences rapid economic growth:
- Corn imports could reach 46 million tonnes by 2040.
- Soybean meal imports might hit 19 million tonnes in the same period.
However, moderate growth would reduce these figures, demonstrating the role of economic conditions in shaping import needs. At present, India levies a 45% customs duty on soybean and 50% on corn, alongside restrictions on genetically modified (GM) products—factors that could influence future trade negotiations.
Transformation in Cotton Trade
Once the leading global cotton exporter, the US has been overtaken by Brazil in recent years. Meanwhile, India’s cotton production has fluctuated, hitting a 16-year low of 29.9 million bales. Although the introduction of genetically modified (GM) cotton hybrids initially boosted production, the lack of new GM technology approvals has contributed to declining yields.
As a result, India is projected to import 3 million bales of cotton in 2024-25, creating a potential growth opportunity for US cotton exports.
Impact on Indian Agriculture
The possibility of increased imports of US corn, soybean, and cotton presents both opportunities and challenges for Indian agriculture:
- Pros: Improved food security and support for the livestock sector.
- Cons: Potential dependency on foreign crops and the shift of India from a net exporter to a net importer of cotton.
Conclusion: A New Era in US-India Agricultural Trade?
With shifting global trade dynamics and India’s evolving consumption patterns, the US sees an opportunity to expand its agricultural exports into the Indian market. However, factors like import duties, GM crop regulations, and domestic production trends will play a crucial role in shaping the future of US-India agricultural trade relations. Whether India embraces more US imports or strengthens its domestic agricultural policies remains a key question in this evolving trade equation.