Amid growing uncertainty in India-US trade relations, particularly after the announcement of reciprocal tariffs by the US under President Donald Trump’s second term, India has been advised to strategically balance its agricultural trade policies. A new working paper by NITI Aayog, titled “Promoting India-US Agricultural Trade Under the New US Trade Regime”, presents a dual-track strategy aimed at maintaining trade momentum while safeguarding domestic agricultural interests.

Key Recommendation: Dual-Track Approach

According to the Aayog’s policy paper, India must adopt a dual-track approach in navigating agricultural trade relations with the United States. This strategy involves:

• Reducing high import tariffs on non-sensitive agricultural commodities from the US.

• Negotiating non-tariff safeguards to protect sensitive sectors such as poultry from potential market disruption.

The document underlines that while India’s farm sector needs tariff-based protection, certain non-sensitive items with existing domestic supply gaps can be opened to enhanced imports without affecting local producers.

"A dual-track approach is essential now. In the short term, India should consider to selectively reduce high tariffs on non-sensitive imports and negotiate non-tariff safeguards on vulnerable segments such as poultry,” the working paper suggests.

Context: Reciprocal Tariffs and Trade Pressure

The recommendations come in the wake of the US implementing reciprocal tariffs and seeking greater market access for its agricultural exports, particularly after Trump’s re-election in January 2025. These moves have unsettled global markets and created fresh concerns among Washington’s key trade partners — especially India.

India, which has historically had a trade surplus in agriculture with the US, is now being pushed to make concessions in areas where the US holds significant export strength, such as soybean oil, almonds, and walnuts.

Strategic Concessions in Edible Oils and Nuts

One of the critical recommendations in the paper is that India can offer strategic concessions in areas where domestic supply shortages exist — such as edible oils and tree nuts. The paper notes:

• India is the largest importer of edible oils globally.

• The US has surplus soybean production, largely genetically modified (GM).

• Allowing greater import of US soybean oil can help bridge India’s supply gap and address trade imbalances — without hurting domestic growers.

"India can also strategically offer concessions where domestic supply gaps exist, such as in edible oils and nuts,” the paper highlights.

Targeted Market Access for Indian Agri Exports

While recommending concessions, the paper strongly emphasizes that India must extract reciprocal gains. This includes:

• Negotiating enhanced market access in the US for Indian shrimp, fish, spices, rice, tea, coffee, and rubber.

• India currently earns approximately USD 5.75 billion annually from agricultural exports to the US.

• The paper calls for duty waivers or tariff-rate quotas (TRQs) to support Indian exporters.

These measures would ensure that India’s interests are balanced and not sacrificed purely for appeasement under pressure.

Enhancing Competitiveness Through Structural Reforms

Beyond short-term trade management, the working paper calls for medium-term reforms in India’s agricultural sector to ensure global competitiveness:

• Adoption of modern technology and precision farming to improve productivity.

• Market and regulatory reforms to enable faster and more profitable trade.

• Private sector participation and infrastructure development in logistics and agri value chains.

“Bridging the productivity gap by embracing appropriate technologies, market reforms, private sector participation, improvement in logistics and development of competitive value chains,” the paper adds.

Such changes are essential to sustain export growth, attract foreign investments, and position India as a reliable agricultural trade partner.

Indo-US Agri Trade: Current Landscape

Over the past two decades, the India-US agricultural trade relationship has expanded steadily. Notable trends include:

• India’s exports to the US: Frozen shrimp, basmati rice, spices, and processed cereals.

• India’s imports from the US: Almonds, pistachios, walnuts, and high-value commodities.

• Trade surplus: India maintains a surplus in agri trade with the US, which continues to rise.

However, the paper warns that the share of agriculture in bilateral trade is declining, and both nations are diversifying portfolios, signaling the need for new and forward-looking policy frameworks.

Protection Without Isolation

One of the most important points made by the Aayog is that protection of domestic agriculture must not come at the cost of global integration. While some segments like poultry, dairy, and pulses may require safeguards due to price sensitivity and livelihood dependence, other areas are ripe for liberalisation and export-oriented expansion.

This balanced perspective is essential in shielding Indian farmers while also leveraging trade to address food security, inflation, and strategic bilateral ties.

Conclusion: Navigating a New Trade Era

As India and the US enter a new phase of bilateral trade, particularly under protectionist pressures and shifting geopolitical alignments, the NITI Aayog's dual-track approach offers a pragmatic and forward-looking solution.

By:

• Reducing tariffs on low-risk imports,

• Securing sensitive sectors,

• Negotiating mutual benefits, and

• Investing in farm competitiveness,

India can ensure that its agricultural trade remains resilient, equitable, and aligned with national development goals.

The challenge now lies in effective implementation and trade diplomacy, especially with a more aggressive US trade posture. But with the right mix of policy agility and institutional coordination, India can turn this challenge into a strategic advantage.

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