AFPWhy didn’t India get even a single pound of British corn?
That’s the question US Commerce Secretary Howard Lutnick raised recently while criticising India’s trade policies, taking a swipe at its market restrictions.
In another interview, Lutnick accused India of blocking US farmers and urged it to open its agricultural market – suggesting quotas or limits as a possible approach.
Agriculture is a key battleground in US President Donald Trump’s escalating trade war, with tit-for-tat or reciprocal tariffs set to kick in on 2 April.
Taxes are income charged on products imported from other countries. Trump has frequently branded India a “tariff ruler” and a “big offender” of business relationships.
For decades, Washington has pushed for greater exposure to India’s land business, seeing it as a main untapped market. But India has fiercely protected it, citing food safety, lives and interests of millions of small producers.
To be sure, India’s transition from a food-deficient state to a food-surplus superpower is one of its biggest accomplishment stories.
In the 1950s and ‘ 60s, the land relied on food help to serve its people, but a series of agricultural advances changed that. India became self-sufficient in items, and became the world’s largest cheese manufacturer. Rapid development in agriculture, chickens and fishing expanded its food basket.
Nowadays, India is not just feeding its 1.4 billion persons but, as the country’s eighth-largest agri-produce producer, even shipping grains, fruits and cheese worldwide.
However, despite such big gains, Indian agriculture also lags in efficiency, infrastructure and market access. International price volatility and culture change add to the problem. Produce provides lag far behind the world best. Small landholdings increase the problem- American farmers work with less than a acre on average, while their British counterparts had around 46 hectares in 2020.
No wonder then that output remains reduced- agriculture employs nearly half of India’s workplace but accounts for only 15 % of GDP. In contrast, less than 2 % of the US people depends on gardening. With minimal production work, more people are stuck in low-paying land work, an unusual pattern for a developing country.
This fundamental mismatch even shapes India’s industry policies. Despite its land deficit, India keeps tariffs large to protect its farmers from cheap imports. It maintains average to high levies- ranging from zero to 150 %- on farm goods.
The weighted average tariff- the average duty rate per imported product- in India on US farm products is 37.7 %, compared to 5.3 % on Indian goods in the US, according to the Delhi-based think tank Global Trade Research Initiative ( GTRI ).
Getty ImagesBilateral farm trade between India and the US is modest, at just$ 8bn ( £6.2bn ).
India largely exports grain, shrimp, fruit, fruit extracts, castor oil and black peppers, while the US sends almonds, walnuts, pistachios, apples and lentils.
But as the two countries work on a trade deal, experts say Washington now wants to push “big-ticket” farm exports – wheat, cotton, corn and maize – to narrow its $45bn trade deficit with India.
” They’re not looking to export berries and stuff this time. The game is much bigger”, says Biswajit Dhar, a trade expert from the Delhi-based Council for Social Development think tank.
Pushing India to lower farm tariffs, cut price support and open up to genetically modified ( GM ) crops and dairy ignores the fundamental asymmetry in global agriculture, experts argue.
The US, for instance, heavily subsidises its agriculture and protects farmers through crop insurance.
” In some cases”, says Ajay Srivastava of GTRI,” US subsidies exceed 100 % of production costs, creating an uneven playing field that could devastate India’s smallholder farmers”.
Farming is India’s backbone, supporting over 700 million people, nearly half the country’s population.
” The key thing to remember is that agriculture in the two countries is entirely different”, says Abhijit Das, former head of the Centre for WTO Studies at the Indian Institute of Foreign Trade.
” 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”.
But India’s agricultural challenges aren’t just external. Mr Dhar says much of the sector’s struggles are “its own doing”. Farming has long been underfunded, receiving less than 6 % of India’s total investment- funds meant for infrastructure, machinery and other long-term assets crucial for growth.
AFPTo protect millions of livelihoods, the government shields key crops like wheat, rice and dairy with import duties and price support. ” But even that doesn’t inspire confidence”, he says.
Four years ago, tens of thousands of farmers held protests demanding better prices and legal guarantees of minimum government support-price for staples, mainly wheat and rice.
” Even relatively well-off farmers selling surpluses don’t see a turnaround anytime soon. And if they feel that way, imagine the plight of subsistence farmers”, says Mr Dhar.
Beyond domestic discontent, trade negotiations add another layer of complexity.
Mr Das says the real challenge for India will be how” to have an agreement with the US that takes into account US export interest in agriculture while balancing India’s interests in the farm sector”.
So what’s the way forward?
” India must not yield to US pressure to open its agriculture sector”, says Mr Srivastava. He warns that doing so would disrupt millions of livelihoods, threaten food security and flood local markets with cheap imports.
” 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”.
In the long run, experts say India must modernise its agriculture, making farming more remunerative, and become more competitive to boost exports. Unupom Kausik of agri-business Olam estimates that with top global yields, India could generate a surplus of 200 million metric tonnes of paddy- enough to supply global trade and combat hunger.
” In a way, Trump is holding up a mirror to us. We’ve done little to invest in agriculture’s productive capacity”, says Mr Dhar. ” For now, buying time is the best strategy- maybe offering the US cheaper imports of industrial goods as a trade-off”.
But for the best outcome, he says, India will have to “play hardball. Basically, tell the US- we’re open to negotiations on other fronts, but don’t destabilise our agriculture”.
Clearly India’s challenge is to negotiate from a position of strength- offering just enough to keep Washington at the table while safeguarding its rural backbone. After all, in global trade as in farming, timing and patience often yield the best harvest. The jury is out on whether Trump is willing to wait.