 "Trump's tariffs: Why India has a problem opening up agriculture sector to America")
President Donald Trump has made it clear he plans to push reciprocal tariffs on all US trading partners.
Trump is set to announce reciprocal tariffs today (April 2) – a day which he has referred as ‘Liberation Day’ for America.
India is among the countries Trump is targeting.
Trump previously called India a ‘tariff king’ and ‘big abuser of trade.’
But that’s not all. The United States also wants India to open up its agriculture sector.
The United States’ Commerce Secretary Howard Lutnick in March said his country wants a “macro, large and grand trade agreement with India.”
“Because India is so gigantic, and the US is so gigantic, the right way to do it (trade pact) is a macro, and that’s why we think we can get it done. The US is interested in doing a macro, large-scale, broad-based trade agreement with India that takes everything into account and that I think it can be done,” Lutnick said at the India Today Conclave.
“…It’s time to do something big, something grand, something that connects India and the US together, but does it on a broad scale, not product-by-product, but rather the whole thing. Let’s bring India’s tariff policy towards America down.”
But it’s not as easy as that.
When it comes to opening up its agricultural sector for Washington, New Delhi is in a bind – and for good reasons.
Let’s take a closer look:
Farming and farm trade
First, let’s take a brief look at farming and farm trade between the two nations.
Indian Express quoted data from the National Statistical Office’s Situation Assessment Survey report as showing that the US had just 1.82 million family farms in 2023.
Meanwhile, India had 93.09 million “agricultural households.”
Around half of India’s population, around 700 million people, are engaged in farming.
On the other hand, just two per cent of the US’ population are farmers.
Bilateral farm trade between India and the US is valued at just $8 billion.
This despite India being the world’s eighth-largest agri-produce exporter.
While India sends rice, shrimp, honey, vegetable extracts, castor oil and black pepper to the US, Washington in return sends almonds, walnuts, pistachios, apples and lentils to New Delhi.
As per CNBC, the US now wants India to allow its dairy products and cereals.
As per BBC, India heavily protects its farmers with tariffs on agriculture ranging from 0 to 150 per cent.
India, for example, imposes an average of about 39 per cent tariffs on farm products from the US.
Washington, in contrast, imposes an average of around five per cent tariffs on farm products from New Delhi.
But as we will see later, India has good reason for protecting its farmers.
US subsidies for farmers
Trump loves to carp about the unfairness of his trade partners’ tariffs on American products.
However, when it comes to agriculture not only does the US government impose its own tariffs on products, it also provides subsidies for farmers in the form of direct payments.
As per Indian Express, the US has given farmers anywhere from $9.3 billion to $45.6 billion per year over the past few years.
That figure, which reached a high mark in 2020, comprised almost 38 per cent of US farmers’ net cash income.
From financial assistance programs alone, US farmers and ranchers received $161 billion from USDA between fiscal years 2019 through 2023, according to a December report by the US Government Accountability Office.
As per Indian Express, this money was given to farmers in over two dozen programmes including federal crop insurance ($53.6 billion), Covid-19 pandemic financial assistance ($30.9 billion), market facilitation/trade disruptions relief ($22.6 billion), Price Loss Coverage (PLC), Agriculture Risk Coverage (ARC) and Dairy Margin Coverage ($16.8 billion) and environment conservation programmes ($16.2 billion).
Trump also has a history of giving US farmers handouts.
Under the first Trump administration, farmers received about $217 billion in farm payments, including crop support, disaster, and aid programs – more than in any prior four-year period since 1933, according to a Reuters examination of USDA data.
Adjusted for inflation, the only period with more spending on farmers was 1984 to 1988, when a farm economic crisis battered rural America.
In 2025, direct government farm payments are estimated to touch $42.4 billion.
As per Indian Express, India is set to subsidise farmers to the tune of Rs 500,000 crore or $57.5 billion in 2025 under a slew of programmes including the the Pradhan Mantri Kisan Samman Nidhi (PM-Kisan) ( Rs 63,000 crore), fertiliser subsidies (Rs 171,300 crore), crop loans (Rs 22,600 crore) and insurance (Rs 15,864 crore) as well as MSP, electricity, irrigation water at reduced rates.
However, keep in mind that India has 700 million people employed in the agriculture sector compared to just 3.4 million in the US.
For example, according to the data, while Indian farmers receive Rs 6,000 under PM-Kisan, US farmers get Rs 26.8 lakh under the federal programme.
Past experiences, jobs, cultural issues
According to The Times of India, India’s past experiences with famine pre-Independence and food shortages post-Independence have left it wary about relying on imports.
New Delhi also wants to protect its retail dairy sector which keeps millions of poor people employed across the country.
There are also cultural reasons and quality issues.
This is because America fattens its cattle on ruminant feed like bonemeal and bloodmeal.
India is also worried about the quality of industrial grade American chicken — which is grown at corporate broiler farms
What do experts say?
They say such a move could completely destroy small Indian farmers.
“In some cases,” Ajay Srivastava of Global Trade Research Initiative (GTRI) told BBC, “US subsidies exceed 100 per cent of production costs, creating an uneven playing field that could devastate India’s smallholder farmers.”
“India must not yield to US pressure to open its agriculture sector,” Srivastava warned. “India must prioritise its national interest and protect its rural economy. Trade cooperation should not come at the cost of our farmers, food sovereignty or policy autonomy.”
Abhijit Das, former head of the Centre for WTO Studies at the Indian Institute of Foreign Trade, added, “The key thing to remember is that agriculture in the two countries is entirely different.”
“The US has commercial agriculture, while India relies on intensive, subsistence farming. It’s a question of the livelihoods of millions of Indians versus the interests of US agribusiness.”
“They’re not looking to export berries and stuff this time. The game is much bigger,” Biswajit Dhar, a trade expert from the Delhi-based Council for Social Development think tank, told the outlet.
“In a way, Trump is holding up a mirror to us. We’ve done little to invest in agriculture’s productive capacity. For now, buying time is the best strategy - maybe offering the US cheaper imports of industrial goods as a trade-off.”
He added that India will need to “play hardball. Basically, tell the US - we’re open to negotiations on other fronts, but don’t destabilise our agriculture.”
They say India is unlikely to kowtow to the US’ demands.
Ajay Sahai, director general of the Federation of Indian Export Organisations (FIEO), told CNBC, “Industrial goods do not pose as many challenges as agricultural and dairy products. In India, agriculture is largely for sustenance, not commercial trade. This isn’t trade among equals, and India may not be grant significant concessions on these products. Even if there are concessions, there will likely be quantitative ceilings to limit imports of agricultural goods that could affect local farmers or the general public.”
A piece in The Tribune, pointing to the lavish American subsidies for farmers, called out the US for its hypocrisy.
“Instead of asking India to set its house in order, the need is to ask the US to open up its agriculture. This can only happen if the US is asked to first dismantle the fortress around its highly subsidised agriculture,” the piece stated.
The Indian government seemingly understands the threat all too well.
The Tribune quoted Commerce Minister Kamal Nath as saying, “We don’t mind competing with American farmers but we cannot take on the US Treasury.”
With inputs from agencies
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