India and the United States are currently engaged in trade negotiations, with discussions focusing on India's potential purchase of US corn for ethanol production. This comes as India seeks to boost its ethanol production to meet ambitious blending targets, while the US aims to expand its agricultural exports. However, several factors complicate these negotiations, including concerns over genetically modified (GM) crops, tariff barriers, and the protection of domestic farmers.

India has made significant strides in increasing its ethanol production capacity in recent years. The country has a goal to achieve 20% ethanol blending with petrol (E20) and has already reached this target ahead of schedule. To achieve this, India is promoting the use of alternative feedstocks, including surplus grain and corn. India's ethanol production capacity has increased from 518 crore liters in 2017-2018 to 1623 crore liters in 2023-2024. Much of this production is centered in states like Uttar Pradesh, Punjab, and Haryana.

The US has expressed interest in exporting corn to India, but several obstacles exist. One major concern is that a significant portion of US corn is genetically modified, and India has restrictions on the import of GM crops. Currently, India only permits GM cultivation for cotton. This difference in policy creates a significant barrier to importing US corn.

In addition to GM concerns, tariff barriers also play a role. India's tariff structure includes a 15% duty on a limited quota of corn imports and a 50% duty on imports exceeding that quota, which can make US corn less competitive. These tariffs are in place to protect domestic farmers and the maize-for-ethanol ecosystem. Indian officials are wary that cheaper imports could threaten the livelihoods of local farmers, particularly in states like Bihar, a major corn-producing region.

The Indian government has been actively promoting ethanol production to reduce reliance on oil imports and boost the agricultural sector. The ethanol blending program aims to utilize domestic produce and save foreign exchange. Importing corn for ethanol production could undermine this goal of import substitution.

Despite these challenges, negotiations between India and the US are ongoing. The US is keen to expand its corn exports, while India is exploring ways to meet its growing ethanol demand. Whether a mutually agreeable solution can be found remains to be seen, but the outcome will have significant implications for both countries' agricultural and energy sectors.

Recently, India has revised its export regulations to permit the export of Second Generation (2G) ethanol, which is made from waste materials. This move aligns with India's ethanol blending goals and global biofuel trends. Transport Minister Nitin Gadkari has suggested that India should begin exporting ethanol as surplus production exceeds domestic blending requirements. The government is also considering isobutanol-diesel blends as an alternative fuel.