India’s agriculture and dairy sectors are protected under the India-US trade deal, ensuring farmer livelihoods and food security, while exports gain improved access to the US market
-1770209240358_d.png "India-US trade deal: What it means for agriculture and dairy")
India-US trade deal protects India's agriculture. Representational Image
India has safeguarded its core interests in agriculture and dairy under the India-US trade deal while improving market access for Indian goods, the government said following the deal announced by the US President Donald Trump earlier this week.
Commerce Minister Piyush Goyal said, “core sensitivities in food and agriculture have been fully safeguarded,” adding the pact will boost export competitiveness and create opportunities for MSMEs, entrepreneurs, and skilled workers.
Here's what the trade deal means and how could it benefit the farmers.
A tariff is a tax a country charges on goods imported from other countries. Importers pay this tax to the government, and usually, companies pass the cost on to consumers.
Import duties make imported goods more expensive. Other factors, like the tariffs on competing countries (e.g., Bangladesh 20 pc, Vietnam 20 pc, Thailand 19 pc) and the quality or standards of the goods, also affect prices.
Agriculture in India: A Livelihood Issue
Agriculture and allied activities such as animal husbandry form the backbone of India’s rural economy, providing employment to over 700 million people. Unlike developed countries where farming is highly mechanised and corporatised, agriculture in India is primarily livelihood-based.
Allowing cheap imports from countries that heavily subsidize farmers could harm Indian farmers, lower their incomes, and threaten food security, making agriculture a sensitive issue in trade talks everywhere.
Global Trade Dominated by Big Corporations
The global food trade is highly concentrated. Reports suggest that about 90 per cent of global food trade is controlled by roughly five multinational corporations that have historically used predatory pricing strategies.
If India reduces protection sharply, domestic farmers could become vulnerable to global giants, leading to long-term dependence and market instability. The potential impact on rural employment and incomes makes agriculture a contentious issue in trade talks.
Why Developed Nations Seek Access to India
For countries such as the US, Australia and the European Union, agriculture is a major export industry. In 2024, US agricultural exports stood at USD 176 billion, accounting for about 10 percent of its total merchandise exports according to PTI. With large-scale mechanised farming and heavy subsidies, the US and other developed nations view India as a lucrative market for expansion.
US agricultural exports to India were USD 1.6 billion in 2024, including almonds, pistachios, apples and ethanol. However, India’s farm sector is structured around livelihoods rather than corporate scale, making unrestricted access risky for domestic producers.
India’s Protection Framework
India shields its agriculture sector using a mix of tariffs, import duties and regulations. The tariff structure ranges from zero to 150 per cent depending on the product, particularly protecting staple crops, dairy and key livelihood-sustaining items. Opening agriculture fully would mean reducing these barriers and exposing Indian farmers to subsidised imports.
Other countries also protect their farmers. The US, for instance, imposes high duties on select products, including 350 per cent tariff on tobacco, and uses complex non-ad valorem tariffs that raise effective import costs.
Subsidy Imbalance in Global Farming
Trade experts note that the US provides massive subsidies to its farm sector. In some years, support exceeded production value for certain products — Rice (82 per cent), Canola (61 per cent), Sugar (66 per cent), Cotton (74 per cent), Mohair (141 per cent) and Wool (215 per cent).
Such subsidy levels allow foreign producers to sell cheaply abroad. If these products enter India with low duties, Indian farmers — who do not receive similar backing — would struggle to compete.
Dairy and Staples Are Especially Sensitive
India treats almost the entire agriculture sector as sensitive because over 50 per cent of the population depends on it for livelihood. Dairy is particularly critical, supporting millions of small farmers and cooperatives. Any surge in imports of milk products or animal feed could destabilise rural incomes and weaken India’s self-sufficiency in food production.
WTO Rules Support India’s Position
India’s agricultural tariffs are consistent with World Trade Organisation norms. WTO rules allow member countries to protect sensitive sectors, especially those linked to food security and rural employment. This gives India legal space to safeguard farming even while pursuing trade liberalisation in other sectors.
India’s Expanding Farm Exports
India is simultaneously expanding its export footprint. In FY25, agricultural exports rose to over USD 51 billion from USD 45.7 billion in 2023-24, with around USD 5 billion going to the US. Total exports in FY25 stood at USD 437 billion.
India aims to reach USD 100 billion in combined exports of agriculture, marine products and food and beverages in the next four years. Though it is the world’s second-largest agricultural producer by value, India accounts for only 2.2 per cent of global farm exports, indicating scope for growth without weakening domestic protection. Major exports include rice, tea, coffee, spices, cashew, oil meals, oilseeds, fruits and vegetables.
Non-Tariff Barriers Still Persist
Tariffs are only one part of trade. Non-tariff measures also affect market access.
According to experts, the US has complex sanitary and phytosanitary (SPS) rules that often act as disguised barriers. The Maximum Residue Limits on pesticides are among the strictest globally, making compliance difficult for developing countries, including India, even when tariff rates are reduced.
What the Trade Deal Changes
US President Donald Trump has announced that Washington will bring down reciprocal tariffs on Indian goods to 18 per cent from 25 per cent, after earlier imposing steep duties linked to trade imbalances and purchases of Russian crude and military equipment. The reduction makes Indian exports more competitive in the US market. At the same time, India has ensured that agriculture and dairy are not opened in a way that harms farmers.
Balancing Exports and Rural Stability
The India-US trade deal seeks to balance export growth with rural stability. While Indian manufacturers and exporters gain improved access to the American market, New Delhi has drawn a clear line on agriculture and dairy.
For India, farming is not merely a trade sector — it is a livelihood system, a food security pillar and a socio-economic foundation. By safeguarding it, the government aims to pursue global integration without compromising the millions who depend on agriculture for survival.
(With PTI Inputs)
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