India's ethanol drive imperils its push for edible oil self-sufficiency
Helped by record corn and rice harvests, New Delhi is using more of the grains to make ethanol and meet its target of blending 20% of the biofuel additive with gasoline. The process, however, produces Distillers Dried Grains with Solubles (DDGS), a protein-rich byproduct that is flooding the animal feed market.
The DDGS glut is weakening demand for oilmeals, depressing oilseed prices and prompting farmers in the South Asian nation to plant more corn and rice in place of soybeans and groundnuts — despite New Delhi's push to grow more of the oilseeds to ease imports.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Diplomat
a day ago
- The Diplomat
Can India Survive the Trade War?
Trump's tariff onslaught has forced India into a precarious position, and New Delhi is employing three strategies in tandem to get out of it. New Delhi has been blindsided by U.S. President Donald Trump's recent tariff temper tantrums. While Indian policymakers anticipated some trade tensions with the United States during Trump's second term, they hoped that Prime Minister Narendra Modi's strong rapport with Trump, along with the geostrategic importance of the India-U.S. partnership, would spare them from the worst of Washington's protectionist impulses. Indeed, until recently, India-U.S. trade ties seemed to be heading in a positive direction. Trump and Modi agreed to increase bilateral trade to $500 billion by 2030 during their meeting in February. Earlier this summer, India and the United States seemed on the verge of clinching a trade deal. In a dizzying reversal, on August 7, India found itself with a 25 percent tariff on most products it sells to the U.S., its largest export market. This tariff rate is set to increase by an additional 25 percent on August 27, a punishment for India's purchases of Russian oil and gas. India also faces the looming threats of indirect tariffs, including steep tariffs on pharmaceuticals and semiconductors and a 10 percent tariff on goods from countries that are members of the 'anti-American' BRICS organization. Trump's tariff onslaught has forced India into a precarious position, and New Delhi is employing three strategies in tandem to get out of it. First, New Delhi is confronted with the daunting task of securing a deal with Washington, without violating any key redlines that would jeopardize Modi's domestic support. India is also attempting to delicately manage its geoeconomic relationship with China, cooling tensions with Beijing without ignoring preexisting military and economic security concerns. While hedging between the two great powers, India is also seeking to advance its geopolitical ambitions of assuming great power status by diversifying its economy to alternative partners. Managing Trump's Tariff Pressures Faced with a barrage of tariff threats, New Delhi has sought to strike a deal with Washington without compromising its key interests. India has refused to rush into an unfavorable agreement, unlike other major U.S. trading partners. While having drawn a clear redline at exposing its agriculture and dairy sectors to competition from U.S. exports, in the hopes of securing a deal, India has offered a range of limited and strategic concessions, including reducing tariffs on 55 percent of U.S. exports and increasing purchases of American defense and energy products. Thus far, India has refrained from retaliating, aiming to avoid escalation that would jeopardize the prospect of a deal that might ease existing retaliatory tariffs and the impending 25 percent secondary tariff related to India's purchases of Russian oil. Indian officials are reportedly exploring what concessions can be offered at negotiations with the U.S. later this month, including tariff reductions on a limited range of agricultural products, namely cheese and almonds, that would have minimal impacts on domestic producers. While some Indian oil refiners have decreased their purchases of Russian oil, New Delhi has remained adamant that it will continue imports of Russian oil that are legally permissible under the G-7 price cap. As a clear signal of resolve and as part of a broader effort to hedge against the U.S., India has simultaneously moved to bolster its historically strong economic and defense ties with Russia. New Delhi's firm stance reflects domestic political pressures. Modi has touted India as an emerging great power destined to play a key role in the future geopolitical and economic order and he cannot afford to be seen as appeasing Trump's whims. Concessions to the United States that undermine the standing of the ruling Bharatiya Janata Party (BJP) with Indian farmers, especially tenuous since the farmer protests that swept the country a few years ago, would be political suicide. Other factors also reduce India's incentive to rush into a deal: the legality of Trump's tariffs is being openly challenged, and India has no guarantee that Trump would not backtrack on any deal that is reached between them. This approach is, however, not without risks. Trump has seemingly run out of patience and has already imposed tariffs on India for its refusal to make a deal once. While negotiations have stalled, Southeast Asian economies, including Vietnam, Indonesia, and the Philippines have all secured lower tariff rates that make them more competitive in the U.S. market than India. India's exports to the U.S. accounted for 2 percent of its GDP last year. Goldman Sachs has suggested that the 25 percent tariff would cut India's economic growth by 0.3 percentage points, with this doubling if the additional secondary tariff goes into effect. Prolonged trade tensions also risk exacerbating the already notable deterioration in India-U.S. relations, fueled not only by economic disputes but also by Trump's budding friendship with Pakistan's military chief and talks of the U.S. purchasing Pakistani oil. Continued strains on India-U.S. relations are certainly in neither New Delhi nor Washington's geostrategic interests, particularly if they remain committed to countering China's political and economic influence. These tensions could potentially jeopardize this year's Quad leaders summit in India, and even the broader future of the Quad partnership. While Modi needs to signal resolve for his domestic political audience, his advisers should also find ways to keep the doors open to negotiations and consider concessions they could feasibly make when U.S. trade negotiators visit India later this month. Can India Count on China? Increased trade with China could help stabilize India's economy amid tariff threats from Washington, especially if it can increase its raw materials exports to China. India has deep-seated security concerns over its border dispute with China. The border dispute extends back as far as the 1960s and has flared up multiple times, particularly in 2020 when clashes in the Galwan Valley resulted in the deaths of 20 Indian soldiers. The two Asian giants have also competed to position themselves as leaders of the Global South for decades. However, New Delhi is tentatively seeking to thaw ties with Beijing, hoping to avoid having tensions with both great powers at once. Defense Minister Rajnath Singh's visit to Shanghai in June marked the first visit by a senior Indian government official to China since 2020. Modi is also expected to attend the Shanghai Cooperation Organization (SCO) summit at the end of August, marking his first visit to China since 2018. Beijing has also shown willingness to improve bilateral relations, having eased export controls on urea, of which India is the world's largest importer. However, New Delhi's deep-rooted concerns about the challenges Beijing poses to India's economic and national security mean that cooperation will remain limited. Last year, India ran a massive $99.21 billion trade deficit with China, which includes imports in a variety of sectors that are critical to the Indian economy, such as electronics, textiles, and manufacturing. Too much economic cooperation with China could very well result in the Indian market being flooded with Chinese imports. Additionally, China may not seek to cooperate with India given its ambitions to play a greater role in manufacturing and supply chains, in which China currently dominates. Whether China will play ball with India depends on decisions made in Beijing, which are highly strategic and often only made in their own best interest. While working to foster better ties with China, India must carefully consider the broader geopolitical implications of its actions. On one hand, thawing relations with China while keeping its head above water with the U.S. will position India well in the event of a China-U.S. grand bargain. On the other hand, making concessions to China while Beijing maintains an aggressive stance toward their disputed borders would make Modi look weak and invite opposition criticism. India's Diversification Efforts Given the risks associated with further economic integration with the United States and China, might India be able to forge meaningful trade ties with alternative partners? New Delhi embarked on a flurry of trade negotiations between 2021 and 2022 as part of a broader effort to reduce India's economic exposure to China; this campaign lost momentum between 2023 and 2024 as concerns over protecting key domestic industries and contentious issues like rules of origin and data regulation stalled negotiations with several partners. However, the onslaught of U.S. tariffs has re-energized India's interest in diversifying its trade relationships to reduce its vulnerability to economic coercion from both Washington and Beijing. New Delhi has recently finalized a free trade agreement with the U.K. and has accelerated or revived trade negotiations with the EU, New Zealand, Peru, and Oman, while working to deepen existing agreements with Chile and Australia. India has also sought to strengthen ties with other members of the BRICS bloc, agreeing to boost bilateral trade with Brazil and resuming talks with South Africa. However, considering that about 18 percent of India's exports go to the U.S. and about 15 percent of India's imports come from China, such efforts may not significantly reduce dependence on the two great powers. New Delhi has a prime opportunity to capitalize on a moment when many countries are seeking alternatives to both the U.S. and China to attract greater foreign investment and strengthen trade ties with countries that occupy strategic positions in critical supply chains. This, in turn, would bolster India's role in global manufacturing and advance India's economic influence and geopolitical ambitions. The opportunity for India is particularly evident in sectors like pharmaceuticals – where it has long been seen as an alternative manufacturing hub to China – and semiconductors, where the government has launched ambitious domestic initiatives and forged partnerships with South Korea, Japan, and Taiwan to fuel its ambitions to rise as a semiconductor manufacturing power. India's efforts to diversify are not without potential pitfalls. Trade liberalization has proven to be slow and politically contentious within India, and attracting sustained foreign investment will require structural reforms that the government may be unwilling or unable to implement. Major substantive disagreements between India and key partners persist and will remain challenging to resolve. India's ambitions to bolster its role in global manufacturing and trade also face several challenges. Indian exports face stiff competition from China and emerging Southeast Asian economies, which are also diversifying away from the U.S. market. India will struggle to match China's manufacturing scale, and Indian exports may struggle to compete in developed markets – such as the EU and Canada – that already have FTAs with India's Southeast Asian competitors. Trump's recent warnings to Apple CEO Tim Cook against expanding manufacturing operations in India also suggest that he will not respond favorably to any efforts by. U.S. firms to shift manufacturing to India. Conclusion New Delhi's efforts to strategically hedge and diversify are a significant geopolitical and economic gamble. India has little choice but to try to soothe simmering trade tensions with the U.S. without abandoning its redlines, while carefully managing the implications of increased cooperation with China, and expanding its network of trade ties beyond the two great powers. Imminent pressure from Washington and Beijing could render this gamble a failure for New Delhi, resulting in long-term economic turmoil and political grievances that could end Modi's career. However, if successfully implemented, India could find itself in a geopolitical sweet spot, capitalizing on many countries' desires to reduce their exposure to U.S. and Chinese trade policies to garner greater economic and geopolitical clout. India's long history of strategic autonomy may mean that it will find it easier than many others to adapt in an international system that is rapidly dissolving into chaotic transactionalism. Still, it faces many stumbling blocks, including the uncertainty of U.S. economic statecraft, in its efforts to claim great power status in a fracturing world.
NHK
a day ago
- NHK
India PM Modi expresses defiance against US tariff policy
India's Prime Minister Narendra Modi has vowed to protect his country's farmers in the face of high tariffs announced by the administration of US President Donald Trump. Modi made the pledge in a speech delivered at an Independence Day ceremony in the capital, New Delhi, on Friday. The US announced an additional 25 percent tariff on Indian exports, citing the country's purchase of crude oil and other products from Russia. Modi said that farmers and fishermen are top priorities of his government. In an apparent show of defiance against the tariffs, he said he will stand tall like a wall against any policies that threaten their interests. Modi also touched on the brief military conflict that erupted between India and Pakistan over the disputed region of Kashmir in May. He said the Indian army attacked hundreds of kilometers into enemy territory and turned terrorist bases into rubble. He warned Pakistan that if any unforeseen incidents occur in the future, India will decide what kind of punishments to impose.
Japan Times
a day ago
- Japan Times
Modi slams ‘economic selfishness' in defiance of U.S. tariffs
Indian Prime Minister Narendra Modi announced tax cuts, pledged policy reform and urged the citizens to design and produce high quality goods at home, in a sweeping Independence Day speech that advocated for self reliance in a protectionist global economy. "In the global situation, economic selfishness is increasing day by day,' Modi said in his address to the nation from the historic Red Fort in New Delhi on Friday. "The demand of the time is to move ahead with courage and meet our own goals.' The remarks come against the backdrop of U.S. President Donald Trump's global trade war. In the last few weeks, Trump hit India with a 50% tariff rate — much higher than regional peers. The levies could hurt exports and put nearly 1% of the nation's gross domestic product at risk, analysts said. In the 103-minute speech, Modi batted for self sufficiency in critical sectors, including energy, minerals and defense. Labeling India's dependence on imports as "unfortunate,' Modi asked industrialists and the private sector to build quality goods and look at ways to lower production costs. "We should not waste our energy in belittling others, our focus should be on strengthening ourselves,' he said. "For a nation, the greatest criteria for self-dignity is its self-reliance,' Modi added, while addressing a crowd wearing white hats printed with the slogan "New India.' For years, Modi has promoted "Make in India" policy, with his government spending billions of dollars in incentives for companies to manufacture locally. However, the push for homegrown goods and technology have taken on new urgency amid the rising global uncertainty. The Indian leader said the government is taking steps to make the nation self-reliant in energy, with initiatives in the solar, hydrogen and nuclear sectors. He also added that the country is now working in "mission mode' in the semiconductor sector, with first locally made chips expected in the market by the end of this year. "The speech suggests that there is greater focus on self sufficiency across various sectors amid growing geo-economic fragmentation and weaponization of global supply chains,' said Sonal Varma, an economist with Nomura Holdings. New normal Hitting a nationalistic note, Modi said that India's security policy had entered a "new normal' where nuclear blackmail would not be tolerated. "We will no longer differentiate between terrorists, those giving support and strength to them,' said Modi, with the name of the military mission undertaken against Pakistan, "Operation Sindoor' spelled out with flower petals on a massive hoarding in the backdrop. He also said India and its farmers have sole right over its share of water from the Indus river. Declaring that the ways of war have changed, Modi said that India was adapting to the evolving warfare and will develop a "precise' and "targeted' indigenous weapon system in the coming decade, to protect strategic installations, cities and sacred places from missile and drone attacks. "This will be a formidable deterrent to any hostile attempt to harm us,' he added. Turning to domestic security, Modi announced the government will be setting up a "demography mission' to address the imbalance caused by infiltration and illegal migration into India. The government has been aggressively pursuing the issue of immigration from its Muslim-majority neighbor Bangladesh and has instituted policies in the past to counter it. Protecting farmers Modi reiterated his commitment to protect its agriculture, dairy and marine sectors from global headwinds. "I will stand like a wall against any harmful policies impacting them,' the prime minister asserted. "India will never accept a compromise on anything related to its farmers, cattle herders and fishermen.' Modi and his ruling party have seized on growing friction with the U.S. to bolster support from farmers ahead of a crucial state election. Farmers are one of the most influential voting blocs in the world's most populous nation. India's trade agreement with the U.S. has been stuck due to its reluctance to open up its domestic market to U.S. agriculture and dairy products. More reforms Hailing India's might, the prime minister said the nation's macro-economic fundamentals remain strong, with inflation in control and a foreign reserve war chest adequate. That means India "must focus on even greater goals now,' he said. The government will cut consumption tax for the first time since it was introduced nearly a decade ago, to spur economic demand and boost consumption. "We are bringing next-generation Goods and Services Tax reforms that will reduce the tax burden drastically across the country,' Modi said. Since its introduction in 2017, businesses had been calling for simplification of the complex tax structure. The changes will be unveiled around the Hindu festival of Diwali, scheduled for October this year, the Indian leader said, though he did not give details of the proposed changes. The tax tweaks could boost a slowing economy and lift disposable incomes for the middle class. India's central bank sees the economy expanding 6.5% in the fiscal year that started in April — same as last year and way below the average 8% growth seen before that. "The India GST reform could be a trigger to shake Indian markets out of their slumber,' said Rajeev De Mello, a portfolio manager at Gama Asset Management. The nation's equity benchmark, NSE Nifty 50 Index, is up 4% in 2025, underperforming the S&P 500's 10% gains and the MSCI China Index's 27% advance. The nation will also set up a task force that will suggest next-generation reforms in a time-bound manner, Modi added. Its mandate will be to accelerate economic growth, cut red tape, modernize governance, and prepare the country for the demands of a $10 trillion economy by 2047, he said.
