August 22, 2024

With strong domestic demand for corn in India, country's exports dropped

India has started importing duty-free corn from neighbouring Myanmar, with at least three ships having arrived in Tamil Nadu so far and a few more expected to reach by July-end.

Initially, imports were valued at $268 a tonne but prices have now increased. If corn is imported from any other country, India's Customs Department would impose a 60% duty in addition to other charges.

In 2020, imports of 500000 tonnes of corn were allowed under India's tariff rate quota (TRQ).

There is good demand for corn from domestic starch manufacturers and ethanol producers. As for India's poultry sector, demand has been on the rise, with an additional one tonne needed every year. Currently, this demand is estimated at around 16 million tonnes.

The sector would have to compete for domestic corn supply with the ethanol production industry which used 0.8 million tonnes of corn in the last fiscal year. This is expected to increase to 3.4 million tonnes this fiscal year before rising to 10 million tonnes by 2027-28.

To ensure adequate supply, the Indian government is considering allowing the import of genetically modified (GM) corn at a lower import duty.

In the meantime, India's corn exports fell to a four-year low in the 2023-24 period, experiencing a 58% decline in volume. This drop was due to higher domestic prices and a reduced crop, coupled with increasing demand from ethanol, poultry and starch producers.

Specifically, corn exports have declined to 1.44 million tonnes during 2023-24 from the previous year's 3.45 million tonnes. Major buyers like Bangladesh and Vietnam have cut their off-take and looked to other cheaper origins.

Moreover, trade sources said that Indian corn has not been competitive globally.

- Dr. Dinesh Bhosale