The US and India could forge a beneficial soyabean trade deal, addressing food security for India and supporting American farmers. This comes as US soyabean exports to China have been hit by tariffs.
When former US President Trump imposed tariffs on China in 2018, China retaliated by taxing US soyabeans. This led to a sharp drop in shipments and required the US government to provide financial aid to farmers. Although a later deal briefly improved exports, China had already shifted its sourcing to Brazil and Argentina, which now supply over 60% of its soyabean imports. With renewed tariffs in 2025, American soyabean farmers face similar challenges. As the US looks for new markets and China remains focused on other suppliers, India, a major importer of edible oils and soy products, is being considered.
This presents a strategic opportunity for both countries. The US, the world’s second-largest soyabean producer, can find a new market. India, the world’s largest consumer of edible oils, spends over $20 billion annually on imports, mainly palm and soya oil from Southeast Asia and South America. India imports about 60% of its edible oil needs.
Currently, trade between the US and India in soyabeans is low. This is partly due to India’s policies to protect its farmers and its caution towards genetically modified (GM) crops. However, this caution might make a deal politically easier.
For US President Trump, increasing soyabean exports would benefit farmers in key states like Iowa and Illinois. For Indian Prime Minister Narendra Modi, protecting the livelihoods of millions of small soyabean farmers in states like Madhya Pradesh and Maharashtra is crucial. Any agreement must ensure that neither country’s farmers are disadvantaged.
A successful partnership could be built on three main ideas: offering stable markets for US farmers, providing flexibility to protect Indian farmers, and creating a step-by-step plan to build trust.
The US could offer long-term supply contracts, potentially through its Agriculture Department’s credit-guarantee program. This would guarantee a steady demand for American farmers. India could introduce a tariff-rate quota system. This would allow a certain amount of soyabeans to be imported at a low duty, while protecting domestic prices for any imports above that limit. A fund to stabilise prices could also be set up. This would help shield farmers from price drops and keep retail prices stable.
India’s regulations could also be adapted to allow the safe testing of new, high-yield GM soyabean varieties. This testing should be transparent, supervised by the public, and introduced in phases. Keeping these new technologies in the public domain would help avoid issues seen with Bt cotton, where private companies controlled the seeds, leading to high costs for farmers.
Staggering the trade process is important. India already imports large amounts of soyabean oil, much of which comes from GM crops. Since refined oil does not contain living DNA, importing it is legal. However, the process of crushing the beans and extracting the protein-rich soy meal often happens outside India. This means India pays for the oil but misses out on the meal, which is vital for animal feed, and loses opportunities for rural jobs and value addition.
A proposed approach involves a phased model. First, India could increase imports of crude soyabean oil from the US. This would help lower food prices in India and provide an immediate export market for US farmers. Next, India could start importing raw soyabeans, possibly under quotas, to be crushed domestically by farmer cooperatives. The oil would be used for cooking, and the soy meal would be used to feed poultry and dairy animals, keeping the value addition within India.
In the longer term, the partnership could expand to include joint research and the sharing of technology for developing higher-yield soyabean varieties, improving farming productivity in India.
This “oil today, beans tomorrow, technology later” strategy could turn trade into a shared national interest.
India’s cooperative movement, like the successful Amul dairy model, can serve as an example. Amul transformed India from a milk-deficient nation to the world’s largest producer by empowering small farmers with control over milk collection, processing, and sales. Profits were retained in rural communities. Soyabeans could follow a similar path, with farmer cooperatives managing crushing, refining, and marketing to ensure benefits remain local.
This deal offers political advantages for both leaders. President Trump could tell his voters he secured a new market for American farmers and saved jobs. Prime Minister Modi could assure Indian farmers that food prices would be managed and their interests protected through a smart agreement.
However, India must learn from the experience with Bt cotton. The key will be to place farmer-owned cooperatives in charge of processing and ensure government regulations are clear and enforceable.
In a world often marked by competitive politics, this soyabean deal presents a rare chance for a mutual win-win outcome.