Should India placate Trump administration by allowing imports of GM crops?
In a paper published in May with economist Raka Saxena, NITI Aayog member and agricultural economist Ramesh Chand argued that India could allow imports of US soybean and maize-based ethanol
While India regards agriculture and dairy to be sensitive areas in its trade negotiations with the United States, a NITI Aayog member thinks India could offer concessions on feed crops like soybean and maize (corn) as part of “strategic trade management.”
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In an interview with Financial Express, Union Finance Minister Nirmala Sitharaman said India wants a “big, good, beautiful” trade deal playing on US President Donald Trump’s choice of words, but the interests of Indian farmers would not be compromised. The US is keen on India importing more of its agricultural produce as China, a big buyer, has turned to other countries after Trump imposed punishing tariffs on its exports.
Paper missing from NITI Aayog’s website
In a paper published in May with economist Raka Saxena, NITI Aayog member and agricultural economist Ramesh Chand argued that India could allow imports of US soybean and maize-based ethanol, to placate a country with which India has a surplus both in agricultural and non-agricultural trade. It also said some quantity of US dairy and poultry products could be allowed in, provided India’s religious and cultural sensitivities were respected.
The paper is no longer available on NITI Aayog’s website.
The catch is that US soybean and corn are GM or genetically-modified. That is, they have traits that kill borers and make them immune to certain herbicides. These traits have been derived from other species that are not sexually compatible with soybean or corn. Owing to these traits, crop damage by pests or loss of nutrients to weeds is greatly reduced. These, and other factors, like large farm size and better agronomic practices, give US farmers a yield – and cost advantage. India’s average soybean productivity is a little over one tonne per hectare. That of the US is three times as much. India’s rainy season maize yield is 2.6 tonnes a hectare. The yield of the winter crop is about 4.4 tonnes. US maize farmers reap 11 tonnes per hectare.
Supreme Court’s split verdict
Only one GM crop is cultivated in India – cotton. The insect-resistant trait incorporated in the crop was approved in 2002 by the Atal Behari Vajpayee government. Another version of the trait was permitted in 2006. Thereafter, the country shut its doors to the technology. Apart from the Congress and the BJP, the CPIM, the DMK, the JDU and AAP have expressed their opposition. In 2010, the Manmohan Singh government imposed an indefinite ban on borer-resistant GM brinjal when it was on the verge of being commercialised. For a long time, the Narendra Modi government did not allow the commercial cultivation of GM mustard despite getting regulatory approval. In view of large imports of cooking oil, it relented. But the Supreme Court blocked cultivation despite the government making a forceful case.
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Last July, the apex court delivered a split judgment in a two-decade-old case where the petitioners were anti-GM activists. The government said approval for commercial cultivation of GM mustard was a policy decision and in the domain of the executive. While Justice Sanjay Karol agreed, Justice B V Nagarathna faulted the decision on many grounds. Both the judges said that the government should quickly evolve a policy on GM crops.
Importing US GM soybean
To get over the impasse, the authors of the NITI Aayog paper have suggested that US GM soybean could be imported and processed for oil for domestic consumption in India’s coastal refineries. For instance, Gautam Adani has a refinery in Mundra, and Bunge in Kandla and Krishnapatnam. India already consumes oil from domestic GM cottonseed. Since 2007, it has allowed the import of GM soybean oil as well. The transgenes or proteins that confer insect resistance or herbicide tolerance are not found in oil. As India imports much of its edible oil, local farmers will not be affected. The meal from the processed beans should be exported so that it does not enter the country’s food chain. (India allowed imports of GM soybean meal in 2021 and 2022 when poultry feed prices spiked).
But imports of maize-based ethanol for blending with petrol could face resistance from Indian sugar manufacturers. They supply 32 per cent of the ethanol used for blending and may not want grain-based ethanol to erode their share – and profitability. Already the proportion of maize-based ethanol is 46 per cent.
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A by-product of alcohol produced from maize is Dried Distillers Grains with Solubles (DDGS) used as animal feed. The GM regulator allows imports on a case-by-case basis. In the last financial year, India imported DDGS worth $86 million, part of which may be GM.
What is long-term solution?
The long-term solution will lie in allowing Indian farmers to grow GM crops. Private seed companies will readily provide (after clearing multi-year regulatory requirements) GM maize seeds because these are hybrids, and the royalty can be recovered from the sale of seed year after year (as hybrids lose their vigour if re-sown). But open pollinated varieties (OPV) dominate soybean cultivation. Farmers can save OPV grain for sowing in the next season. Here the public sector will have to step in.
Coinciding with Trump’s tariff threats, the United States Department of Agriculture (USDA) had published a research paper in March about the opportunities for US farmers in India’s feed sector. The paper said India would be a large animal feed market because of rising population and prosperity and dietary habits shifting to more consumption of animal proteins.
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The paper projected soybean meal imports to increase from 2.1 million tonnes in 2020 to more than 10 million tonnes in 2030 is a situation of rapid income growth. Imports could vary between 49 million tonnes and 53 million tonnes in 2050 depending on the use of GM technology.
Maize is the commodity most consumed as animal feed. It has become the top animal feed since 2000, the USDA paper said. While production has grown steadily to 21 million tonnes, imports peaked at three lakh tonnes in 2019-20. India charges 15 per cent duty on maize imports of up to half a million tonnes annually. Beyond that, the duty rate is 50 per cent. But GM maize imports are prohibited.
