Will Modi’s Visit To US Open Up India's Market For Farm Trade?

Since Trump emerged victorious in the POTUS election on November 5 last year, the discussion in India has focused on the tariffs he may impose on our exports to the US. This is not surprising, as the US is India’s biggest trade partner.

The bilateral trade stands at US$ 129.2 billion, with a surplus of over US$ 35 billion in India’s favour. While this is much smaller than the deficit the US incurs in trade with Mexico (US$ 839.9 billion), Canada (US$ 762.1 billion) and China (US$ 582.5 billion), Trump has made it clear that he wants to reset Indo-US trade.

Agricultural products are on Trump's agenda and in his meetings with Prime Minister Narendra Modi, who is visiting the US, he may demand further reductions in import duties on items such as American pecan nuts. Till 2023, there was a 100 per cent import duty on these, before it was brought down to 30 per cent.

But the US wants more — and this predates Trump’s second ascension — even though India isn’t a big market for US farm produce. 

According to the US Department of Agriculture, “India, despite its rapidly growing economy and population growth, remains a price-sensitive market. US export growth, without the further removal of tariffs, will remain constrained. India is negotiating and agreeing to free trade agreements with several US competitors, including Australia and the UK. Competitors, for example, were able to take advantage of the Section 232 retaliatory tariff restrictions, to gain market share; despite many retaliatory tariffs being lifted in 2023. It will be challenging to regain market share for the impacted products.”

Pulses figure high among India’s imported product groups. In FY 2014 (the American fiscal year from October 1, 2013, to September 30, 2014), the US exported US$ 174 million of pulses to India. In FY 2023, it came down to less than US$ 1 million.

This was the result of “the imposition of Indian retaliatory tariffs affecting major US pulse products in 2018. Retaliatory tariffs on US-origin chickpeas and lentils were removed in 2023, allowing US pulses to resume competitiveness and paving the way for increased exports to India.”

As a consequence, the US pulse exports to India rose to US$ 73.41 million in FY 2024.

Regulatory Uncertainity

India implemented tariff reductions in 2024, but “regulatory uncertainty” is still there, according to the US. “India is the second largest export destination for US tree nuts, valued at US$ 1.1 billion in 2023, and the top export market for almonds. Total US agricultural exports to India for January-October 2024 increased by 21 per cent compared to the same period in 2023.”

India is cognisant of its sensitivities on agriculture, but it has already reduced duties on items of US interest like almonds. There are some 30 major agricultural items imported from the US, where India’s import duties are quite low, point out officials.

In other words, there should not be any major concerns over US farm products glutting the Indian market. India is the net importer of tree nuts; it is the largest importer and consumer of cashews in the world. Similarly, India depends a lot on pulses.

Therefore, higher imports of tree nuts and pulses are unlikely to cause any major disruptions in the domestic market or hurt the prospects of the farmers concerned. Cheaper imports — after all, that’s what lower tariffs will do — of these protein-rich edibles will nutritionally help Indians.

As for India’s farm exports to the US, our government has to come up with a strategic approach. In her Budget 2025-26 speech, Finance Minister Nirmala Sitharaman called exports a powerful engine of economic growth and announced various measures to boost it.

“We will set up an Export Promotion Mission, with sectoral and ministerial targets, driven jointly by the Ministries of Commerce, MSME and Finance,” she said in her Budget speech. The government may consider including the Ministry of Agriculture in the Mission.

But it will have to do much more than that. Consider this: Between 2019 and 2024, the European Union flagged over 400 export-quality products from India as highly contaminated. The government has to ensure that the quality of our farm produce complies with global standards.

This is related to general governance. Those who run the administration are not much bothered about what people eat and drink. As a result, unconscionable practices thrive, like that of confecting synthetic milk — made with the use of industrial chemicals. 

Besides, the government must also ensure that trade decisions are reasonable and predictable; frequent impositions and lifting on ban on farm exports and imports do little good to India.

(The author is a senior journalist, specialising in policy reporting and analysis. Views are personal)