Amidst ongoing trade negotiations between India and the United States, the Indian government has reiterated its commitment to protecting the interests of its farmers. This stance comes in response to recent developments, including the announcement by US President Donald Trump of a 25% tariff on Indian goods, effective August 1. The government's position reflects a long-standing concern over the potential impact of cheaper, subsidized US farm goods on the livelihoods of millions of small farmers in India.
India has historically excluded agriculture from free trade agreements to protect domestic livelihoods. A key sticking point in the trade discussions has been India's firm resistance to opening up its agriculture and dairy sectors. New Delhi argues that allowing cheaper, subsidized US farm goods into the country would harm the income of millions of small farmers. "Agricultural and dairy product protections remain primary concerns, as these sectors are politically and economically sensitive for India. Hence, India is negotiating with US against any tariff reductions on dairy, rice, wheat, and genetically modified (GM) crops like corn and soybeans citing the livelihoods of over 700 million rural citizens, including 80 million smallholder dairy farmers," said Sankhanath Bandyopadhyay, economist at Infomerics Valuation and Ratings.
The US, on the other hand, is pushing for greater access to India's agricultural market, particularly for GM crops, dairy, and products like corn, soybeans, apples, almonds, and ethanol, insisting on tariff reductions in these sensitive sectors, a move India continues to oppose. According to a White House fact sheet, India imposes an average MFN (Most Favored Nation) tariff of 39% on imported farm goods, compared to 5% in the U.S.
India's agricultural sector is a cornerstone of its economy, contributing 18.4% to the country's Gross Value Added (GVA) in 2022–23. More importantly, it employs a majority of India's workforce, primarily in rural and semi-urban regions. For millions of Indian households, crop income is both a livelihood and a buffer against economic uncertainty. The entry of cheaper imports from countries like the United States—where farms are larger, mechanized, and heavily subsidized—could destabilize domestic crop prices and put smaller landholders at significant risk. Indian farms are typically much smaller in size, often family-run and reliant on traditional practices. A sudden drop in prices caused by an influx of imports could have wide-reaching effects on rural incomes and consumption.
Commerce and Industry Minister Piyush Goyal stated in Parliament that the government will not compromise on the interests of farmers. "We are consistently working for the welfare of the farmers and Indian agriculture, to promote prosperity and ensure food security," the minister said. He also highlighted India's recent trade deals with the UAE, UK, Australia and EFTA countries, emphasizing that these agreements were mutually beneficial and were achieved amidst rising protectionism.
The recent imposition of tariffs by the US and the ongoing negotiations highlight the complexities of the trade relationship between the two countries. While both sides aim to expand bilateral trade to $500 billion by 2030, significant differences remain, particularly concerning agricultural market access. The Indian government's commitment to protecting farmers' interests suggests that it will continue to resist US pressure to open up its agricultural sector. The next steps in the negotiations remain uncertain, but a US trade team is expected to visit India in August for further discussions.
