India’s hands in agriculture are tied as they come under increasing fire as trade tensions with the United States escalate. According to experts, the creation of some of India’s agricultural problems are largely self-inflicted according to economist Biswajit Dhar. Meanwhile, the US is bending the country’s arm to force it to open its agriculture sector. Indian policymakers, including the likes of Ajay Srivastava, are calling for a more measured approach to these calls. In their open letter, they call for urgent action to shield India’s rural economy and food sovereignty.
Though both nations are agricultural juggernauts, their farming environments are markedly different. Indian farmers, on average, farm an area smaller than a hectare. By comparison, American farmers farmed an average of more than 115 acres in 2020. The US has long called out India as the “tariff king” and the “big abuser” of US trade relations. Bilateral agricultural trade is minimal, at only $8 billion.
Ajay Srivastava, a leading Indian advocate for the country to take a strong stance.
“India must not yield to US pressure to open its agriculture sector.” – Mr Srivastava
India has a long precedent of protection for its most politically sensitive crops • wheat, rice, and dairy • through high import duties and price support. For US farm products the weighted average tariff is a whopper-37.7%. In contrast, the US levies an average 5.3% tariffs on imports from India. This disparity has long been an area of concern in trade policy debates.
“India must prioritize its national interest and protect its rural economy. Trade cooperation should not come at the cost of our farmers, food sovereignty or policy autonomy.” – Mr Srivastava
The United States heavily subsidizes its agricultural sector – providing extensive, deeply rooted crop insurance and other protective measures for its farmers. Fewer than 2% of the US population farms, and American agriculture is more productive than ever. In contrast, nearly half of India’s workforce is employed in agriculture, contributing only 15% to the country’s GDP. India’s productivity conundrum continues in India with very low investments on agriculture’s productive capacity.
Biswajit Dhar lamented the difference in agricultural positions between the two countries.
Dhar acknowledges that India has made strides in becoming self-sufficient in staples and is currently the world’s largest milk producer. On an ominous side, he points to the lack of investment.
“The key thing to remember is that agriculture in the two countries is entirely different.” – Abhijit Das
India’s major agro-export products are rice, shrimp, honey, vegetable extracts, castor oil, and black pepper. The US sells almonds, walnuts, pistachios, apples and lentils to India. While this trade exchange in both directions is positive, the US’s demands for greater open access to India’s agricultural market are problematic for Indian farmers.
“In a way, Trump is holding up a mirror to us. We’ve done little to invest in agriculture’s productive capacity.” – Mr Dhar
Ajay Srivastava sounds alarm on effects of US subsidies on Indian agriculture
Unupom Kausik suggests that India could potentially generate a surplus of 200 million metric tonnes of paddy with top global yields. This assertion highlights the immense opportunities present in India’s agriculture sector if only we could tackle productivity challenges.
“In some cases, US subsidies exceed 100% of production costs, creating an uneven playing field that could devastate India’s smallholder farmers.” – Ajay Srivastava
Unupom Kausik suggests that India could potentially generate a surplus of 200 million metric tonnes of paddy with top global yields. This statement underscores the potential for growth within India’s agriculture sector if productivity issues are addressed.