India-US Trade Turns a Corn-er: Implications for India’s Ethanol Policy

Ethanol blending has been in the news in recent weeks, amid debates over vehicle compatibility, the push for sustainable fuels at COP30, and the ongoing US–India trade negotiations. Reports suggest that the trade negotiations have yielded a critical consensus: India will allow maize (corn) imports from the US specifically for ethanol production. While the final deal is still being ironed out, this potential allowance signifies a strategically astute move by India. If implemented with careful regulation (to protect domestic farmers), this policy could effectively navigate the core trade-off between the ethanol programme’s demand for feedstock and the imperative to control food price inflation.

If India aims to maintain even E20, it will inevitably face some degree of import dependence unless there is a breakthrough in emerging technologies such as second or third-generation ethanol. Producing substantially higher volumes of crop-based ethanol domestically could have serious groundwater, land-use, and food security implications.

Given India’s policy against genetically modified (GMO) crops for human consumption, it makes sense to allow a limited quantity of GMO maize imports from the US specifically for fuel-grade ethanol production. This could be implemented through a tariff-rate quota system, where a fixed volume of maize (up to a few million tonnes annually, perhaps) can be imported at a lower tariff, while higher duties apply beyond that threshold. In the ongoing India–US trade deal negotiations, this can be used as leverage to catalyse a favourable reduction in other tariffs on Indian imports. Such a strategy would ensure that our distilleries remain viable, blending targets are met, and domestic farmers are protected from being undercut by cheap imports.

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