The agricultural trade relationship between the United States and India is evolving. The US aims to increase its market access for key crops like soyabean, corn, and cotton in India. This interest is heightened by the potential imposition of tariffs on Indian exports by the US. The US Department of Agriculture (USDA) has projected growth in India’s demand for animal products and feed, signalling a potential shift in import patterns.
US Agricultural Exports Overview
The US is a major exporter of soyabean, corn, and cotton. In 2022, the combined value of these exports reached nearly $62 billion. China has historically been buyer, especially of soyabean and corn. However, its imports have declined recently. Mexico and Japan have emerged as top buyers of US corn since 2023, indicating a shift in market dynamics.
India’s Growing Demand for Animal Products
India’s consumption of animal products is projected to rise due to population growth and increasing per capita GDP. The USDA report forecasts increase in demand for feed ingredients like corn and soyabean in the early 2030s. Under a rapid income growth scenario, India’s corn consumption could soar from 34.7 million tonnes in 2022-23 to 200.2 million tonnes by 2050.
Import Projections for Feed Ingredients
To meet the rising demand, India may need substantial imports of corn and soyabean. Under rapid growth, imports could reach 46 million tonnes of corn and 19 million tonnes of soyabean meal by 2040. Even under moderate growth, imports will still be . This presents a lucrative opportunity for US suppliers.
India’s Cotton Market Transformation
India’s cotton production has fluctuated . From being a leading exporter, it is now projected to import 3 million bales in 2024-25. This shift is attributed to the lack of new genetically modified (GM) technology approvals and pest resistance issues. The US sees this as an opportunity to increase its cotton exports to India, especially if import duties are reduced.
Challenges in the Agricultural Trade
India currently imposes high customs duties on corn and soyabean imports. There are also restrictions on genetically modified products. These barriers could hinder the anticipated growth in agricultural trade. The US administration may push for the removal of these tariffs to facilitate greater access.
Future Prospects
The potential for US agricultural exports to India is . With India’s increasing demand for animal products and changing cotton market dynamics, the US could become a key supplier. This relationship may strengthen further if trade barriers are lifted.
Questions for UPSC:
- Discuss the implications of rising agricultural imports in India on its domestic farming sector.
- Critically examine the role of genetically modified crops in enhancing agricultural productivity in India.
- What are the challenges and opportunities presented by the changing dynamics of global agricultural trade?
- Explain the impact of tariff policies on international trade relations, with reference to the US and India.
Answer Hints:
1. Discuss the implications of rising agricultural imports in India on its domestic farming sector.
- Increased imports may lead to reduced prices for local farmers, impacting their income.
- Domestic production may decline as farmers shift focus to less competitive crops.
- Higher imports could lead to reliance on foreign agricultural products, affecting food security.
- Import growth may stimulate demand for better farming practices and technology adoption.
- Potential for increased investment in the agricultural sector to enhance competitiveness.
2. Critically examine the role of genetically modified crops in enhancing agricultural productivity in India.
- GM crops have shown potential for higher yields and pest resistance, improving productivity.
- India’s initial success with Bt cotton illustrates the benefits of GM technology.
- However, lack of new GM approvals has stunted further advancements in crop productivity.
- Concerns over biodiversity and health risks have led to public resistance against GM crops.
- Regulatory challenges hinder the adoption of GM crops, limiting their potential benefits.
3. What are the challenges and opportunities presented by the changing dynamics of global agricultural trade?
- Challenges include fluctuating global prices and trade barriers impacting competitiveness.
- Opportunities arise from emerging markets like India, increasing demand for imports.
- Trade agreements can facilitate access to new markets but may face political resistance.
- Technological advancements in agriculture can enhance productivity and trade potential.
- Climate change poses risks but also drives innovation in sustainable agricultural practices.
4. Explain the impact of tariff policies on international trade relations, with reference to the US and India.
- Tariffs can protect domestic industries but may lead to retaliatory measures from trading partners.
- The US’s proposed tariffs on Indian exports could strain bilateral trade relations.
- High tariffs on imports can increase consumer prices and limit market access for foreign goods.
- Removing tariffs may enhance trade flows and strengthen economic ties between nations.
- Tariff negotiations often reflect broader geopolitical dynamics and economic strategies.
