Indian agriculture, the backbone of livelihoods and food security for over a billion people, is at a critical crossroads.
Global trade wars, rising protectionism and shifting free trade agreements (FTAs) are creating an environment where India’s farmers must contend with both export restrictions and an influx of cheap imports.
The country’s hard-won agricultural transformation — one that lifted millions out of food insecurity — is now threatened.
How India navigates this turbulent trade landscape will determine the future of its farmers and its ability to remain food secure in an unpredictable global economy.
For decades, India’s agricultural policies have aimed at ensuring food self-sufficiency while also expanding exports.
However, as global trade tensions escalate, Indian farmers face mounting challenges. Protectionist policies in key markets are making it harder to export, while trade deals often demand lower tariffs that expose Indian agriculture to external competition.
The real debate is not whether India should open its agricultural markets — but rather, how much, how soon and at what cost?
Among the many global trade pressures India faces, one of the most disruptive has been the wave of protectionism led by the US, particularly under former President Donald Trump.
His ‘reciprocal tariff’ policy penalised countries with higher import duties on American goods.
Given that India’s average agricultural tariff is 17 per cent, compared to the US’ 3.3 per cent, the imbalance is stark.
The impact of these tariffs depends on their structure. If the US applies them broadly to entire product categories — such as fruits — or selectively targets major Indian exports like mangoes and oranges, it could significantly shrink India’s $8.4 billion agricultural export market in the US.
Meanwhile, American farmers receive subsidies and market support, such as the $10 billion farm aid package under Trump, giving them a competitive edge in global markets.
At the same time, India’s Minimum Support Price (MSP) system faces scrutiny by the World Trade Organisation (WTO). This combination of US subsidies and retaliatory tariffs creates a double burden, pushing Indian agricultural exports out of key markets.
While India battles rising trade barriers, pressure is also mounting to lower its own. One such example is New Zealand’s push for greater access to India’s agricultural market under a potential FTA.
The primary demand is reducing import duties on dairy, apples, and wine.
Currently, India protects over 100 million dairy farmers with 30-60 per cent tariffs on dairy imports.
Reducing these tariffs would allow cheaper New Zealand dairy products to flood the Indian market, threatening small-scale farmers who lack the technological and logistical advantages of New Zealand’s $12 billion dairy industry.
Moreover, Indian exporters already enjoy duty-free access to New Zealand, making the FTA’s benefits for India minimal.
The consequences of lowering protective barriers can already be observed in the illegal influx of Chinese garlic, which continues to undermine domestic garlic prices.
Despite an official ban, smuggled Chinese garlic — priced at Rs 400 per kg — has significantly undercut Indian garlic (Rs. 450-600 per kg), forcing many farmers to absorb financial losses.
If banned goods can infiltrate Indian markets, what happens when tariffs are legally removed?
A full-fledged trade liberalisation could disrupt local farming communities, making them reliant on imports and endangering the very fabric of India’s food security.
India’s agricultural success is a product of decades of policy-driven transformation.
The Green Revolution of the 1960s introduced high-yield seeds, irrigation expansion, and fertiliser subsidies, helping the country transition from a food-deficit nation to a major global food producer.
Today, India is the world’s largest producer of milk, pulses, and spices and the second-largest producer of rice, wheat, and fruits.
It exports food grains to over 150 countries, ensuring a steady trade surplus.
However, these gains are now threatened by aggressive FTAs, import liberalisation, and global subsidy imbalances.
Without strategic protection, India risks undoing its agricultural self-sufficiency and increasing dependence on foreign food supplies.
India’s agricultural economy is deeply influenced by trade policies, tariffs, and macroeconomic shifts. Protectionist policies and FTAs both have ripple effects on inflation, employment, and fiscal stability, ultimately impacting farmer incomes and food security.
Mass Unemployment and rural distress: The agricultural sector employs nearly 42 per cent of the workforce. Lowering tariffs on agricultural imports could push small farmers out of business, exacerbating rural unemployment and deepening economic disparities.
Trade Deficit Worsening: India frequently restricts exports of wheat, rice, and sugar to stabilise domestic prices. Lowering agricultural tariffs while maintaining export bans could lead to a worsening trade deficit.
Fiscal Stability at Risk: Tariffs are a major source of revenue for India. A sudden reduction in agricultural tariffs could destabilise fiscal planning, affecting welfare programs, rural infrastructure, and inflation control.
Moreover, India remains vulnerable to global supply shocks. The Ukraine war exposed India’s heavy reliance on imported fertilisers, with prices skyrocketing due to supply disruptions.
Similarly, Indonesia’s 2022 palm oil export ban caused a 27 per cent increase in edible oil prices in India, forcing policymakers to intervene. These events highlight the dangers of over-reliance on external markets for essential agricultural inputs.
India faces a tough balancing act. Protectionism can safeguard farmers but may also lead to inflation and retaliatory measures from trade partners. Liberalisation can attract investment but might expose farmers to unfair competition.
The key lies in strategic trade negotiations that:
Protect sensitive agricultural sectors while securing export advantages for India’s high-value produce.
Shift from tariff reductions to investment-focused agreements that enhance agricultural productivity and rural infrastructure.
Strengthen trade enforcement to prevent banned or substandard imports from undercutting Indian farmers.
Push for greater transparency in WTO discussions to address U.S. and EU farm subsidies that distort global trade.
Instead of full-fledged market liberalisation, India must push for fairer trade terms that ensure its agricultural sector remains resilient against external shocks.
India’s agricultural future hinges on a delicate balancing act between global trade integration and domestic food security.
Unchecked liberalisation could leave Indian farmers vulnerable to unfair competition, erode rural livelihoods, and increase dependence on food imports. Conversely, extreme protectionism could limit export opportunities, discourage investment, and slow innovation.
With the mounting pressures of US trade policies, New Zealand’s FTA demands, and rising global food inflation, India faces a defining moment. Should the country prioritise expanding trade, even at the risk of agricultural self-sufficiency? Or should it safeguard domestic farmers against the volatility of global markets?
The answer to these questions will determine the future of Indian agriculture for generations to come. India must tread carefully, ensuring that in the pursuit of trade liberalisation, it does not compromise the very foundation of its food security and rural economy.
Views expressed are author’s own and do not necessarily reflect those of Down To Earth