Himanshu: Trade deals mustn’t hurt the interests of Indian farmers

While the US grumbles about manufacturing in countries like China, it has a particular problem with India’s agricultural trade tariffs. This is clear from the annual US Trade Estimate Report for 2025 released on 31 March, followed by statements from the US commerce secretary Howard Lutnick and White House press secretary Karoline Leavitt who both criticized India for blocking agricultural trade. 

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India’s average weighted tariff on US farm produce is 37%, according to the Global Trade Research Initiative, an Indian think tank, as against the US’s 5% on Indian agricultural produce. This gap has been picked upon by the US government.

However, agricultural trade between India and the US is not just about average tariffs. This is not the best metric to judge a country’s competitiveness, let alone the reasons for a trade deficit or surplus. Trade patterns, especially in agriculture, are determined by multiple factors including tastes and preferences but also the level of implicit and explicit subsidies provided by governments. 

Trade must thus be seen in the right context. 

India’s farm sector employs millions of farmers, accounting for almost two-fifths of all Indian workers, with average holdings of less than a hectare. Agricultural trade between India and the US is insignificant for the latter, but it is important for us, as America is the largest export destination of our farm produce. We export not just field crops such as basmati rice, but also seafood, meat, honey and other processed foods. If the US puts a 26% reciprocal tariff after its 90-day pause, it will make these uncompetitive, which could hurt the livelihood of many Indian farmers.

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However, a bigger threat may arise if agriculture becomes a point for compromise as part of a larger bilateral trade deal currently being negotiated with the US. Globally, America’s major agricultural exports include wheat, soyabean, maize and dairy products, all of which are protected by high Indian tariffs. Currently, India’s import duty on wheat, soyabean and maize is in the range of 40-50%, while it is 60% for skimmed milk. 

Pressure to reduce tariffs on these is likely to come from the trade war between China and the US. China is among the largest importers of some of these goods from the US, and trade disruption is likely to force the US government to look for alternative markets. Given the size of India’s market, we could see cheap soyabean, maize and wheat (and even dairy products) being dumped here. The fact that US crops are highly subsidized, with the subsidy enormously large for some, could result in price pressures in our market. 

In any case, soyabean and maize prices are currently running below their minimum support prices, so large supplies from the US could be especially worrisome.

The US may also seek to export pulses to India. As with oilseeds, India is a large importer of pulses, even as the government has been trying to expand domestic cultivation and increase these crops’ productivity. A pulses supply glut would push local prices down and could thereby set that agenda back.

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Note that agricultural trade has been an area of dispute between India and the US even before President Trump’s second term. In fact, trade disputes on agriculture have always been a sticking point of trade negotiations at the World Trade Organization, with India facing pressure to reduce its farm subsidies and open its agri-markets. So far, New Delhi has managed to push back, given the central role of agriculture in India’s food and livelihood security.

At a time when Indian agriculture is going through a phase of economic distress, the immediate challenge will be to find alternative export markets while shielding our own markets from cheap imports. However, in the long run, protecting our agricultural market, on which millions depend for their livelihood, would require a global coalition of developing countries to insulate agricultural produce from the impact of tariff wars. Until then, the top priority of any bilateral trade negotiations with any country should be to protect the interests of Indian farmers.

The author is associate professor at Jawaharlal Nehru University and visiting fellow at the Centre de Sciences Humaines, New Delhi.