Trump’s America First, an Opening for Indian Farms

Context: The recent announcement of President Trump related to reciprocal tariff could be a chance for India to transition from protectionism to a productivity-driven agri-export strategy.

Challenges for India in Trade with the USA

High Tariff Disparities

• India imposes an average tariff of 17% on all goods compared to 3% in the US.
• Agriculture tariffs are especially high in India (39% simple average, 65% trade-weighted) compared to the US (5% and 4%, respectively).
• The US may introduce reciprocal tariffs that could hurt India’s exports, especially shrimp, basmati rice, processed foods, and honey.

Agricultural Trade Imbalance

• India enjoys a trade surplus of $3.46 billion in agricultural trade with the US.
• US exports to India include almonds, cotton, ethanol, and soybean oil, but high tariffs (100-150%) on whiskey, walnuts, chicken legs, and skimmed milk powder are major points of contention.

Genetically Modified (GM) Crop Restrictions

• India bans GM soy and maize, despite rising demand for animal feed and ethanol.
• The US, a global leader in GM crops, wants India to ease restrictions.

Non-Tariff Barriers

• Stringent quality standards, lengthy approval processes, and bureaucratic hurdles impact trade.
• Limited market access for Indian agri-exports in the US due to high import duties on certain products (butter, bovine meat cuts, fruits & vegetables).

Weak Agricultural Infrastructure

• India lacks cold storage, efficient logistics, and export-focused processing units.
• Quality certification and traceability issues hinder global competitiveness.

What Needs to Be Done?

Strategic Trade Negotiations

• Leverage negotiations under Mission 500 (targeting $500 billion bilateral trade by 2030).
• Seek lower duties for high-value agri-exports (bananas, okra, mango pulp).
• Offer phased tariff reductions on walnuts, cranberries, cheese, and skimmed milk powder to facilitate trade.

R&D Investments for Agri-Competitiveness

• Increase agri-R&D spending from <0.5% to at least 1% of agri-GDP.
• Encourage high-yielding crops, sustainable farming practices, and export-driven varieties.

Modernize Agricultural Value Chains

• Expand cold storage, logistics, and supply chain infrastructure.
• Improve quality certification and food safety standards for easier global market access.
• Develop agri-export hubs in key production clusters.

Selective Trade Concessions

• Reduce tariffs on low-impact imports like walnuts and blueberries.
• Gradual tariff reductions on poultry, dairy, and ethanol to balance trade interests.

Policy Shift from Protectionism to Productivity

• Move away from subsidy-heavy agriculture (fertilizers, free power) towards efficiency-driven growth.
• Focus on export-oriented policies rather than heavy tariff barriers.

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