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Mainstream, Vol 64 No 16, June 12, 2026

India-USA Interim Trade Deal, 2026: Impact on Agricultural Development and Farmers Welfare | Nayakara Veeresha

Friday 12 June 2026

Abstract

The bilateral interim trade framework between the India and United States of America (USA) is the talk of the nation since its official statement made on 6th February, 2026. The India-US trade deal is labelled as historic and the reduction of reciprocal tariff from 25 to 18 per cent is described as a significant move in deepening the trade relations with USA. The reading of the text gives an impression that India acceded more with little gains in terms of expanding its export basket for the agriculture. The farmer’s income among the rice, sugar, soyabean, apple and maize cultivators might see price fluctuations with high probability of losing rather than gain of income in the long run. The sensitive areas such as poultry, dairy and textile industries are set to gain betterment of incomes. The Government of India needs to fine tune the trade deal agreement so as to benefit the marginal, small and medium farmers by extending the income support or social security scheme to those who are set to lose income.

Keywords: Agriculture, Farmers, Trade, Income and Welfare

The first section delineates the policy outline behind this trade interim framework; this is followed by the trade status of the India-USA in agricultural products in the second section. The highlights of the interim trade deal with subsequent amendments to it is provided in the third section. The fourth section analyses the probable impact of the trade deal on the farmers income and its implications on the agrarian economy of the country. The fifth and final section provides certain areas of improvement and the necessary safeguards for the farmers to be included before the final agreement signs between the India-USA.

Policy Simulation

The continuous talks between the India-USA since January 2025 and the geopolitical changes across the world following the reciprocal tariffs imposed by USA has finally attained a stage wherein both nations come to an interim trade agreement. However, the policy direction for this trade deal especially to the agriculture have been rooted in NITI Aayog’s working paper titled ‘Promoting India-US Agricultural Trade under the new US Trade Regime’ brought out in May, 2025 authored by Saxena and Chand. It advocated that

“USA is expected to remain a big market for export of surplus food from India. Therefore, all efforts need to be made to keep favorable environment for export to USA. This should include strategic opening for US imports into India to achieve larger gains in exports. (Government of India, 2025: 25)”.

This policy advocacy has found place in the Economic Survey 2025-26 wherein

The National Mission on Edible Oils-Oilseeds (NMEO-OS) and the National Mission on Edible Oils–Oil Palm (NMEO-OP) are aiming for nearly 70 million tonnes by 2030-31, reduce import dependence substantially and enhance domestic supply, stabilise farmer incomes, and advance the goal of Atmanirbhar Bharat in edible oils. The scheme ’Mission for Atmanirbharta in pulses’ was also approved on October 1, 2025 to reduce import dependency on pulses. (Government of India, 2026: 233)”.

The policy aims of the schemes clearly intended the purposes of (i) reducing import dependence (ii)farmer’s income stabilisation and (iii) expanding the market for the India’s export basket in agriculture. The opening of India’s market to the USA imports is a strategic one with an aim of gaining entry ticket into the USA markets for the exports and its deepening in agriculture.

State of India-USA Agricultural Trade

India is the second largest producer of agricultural goods in the world. The trade relations with USA is a calculated and adopted a calibrated approach. In agriculture, India enjoys a trade surplus with USA. In 2024-25, the agricultural trade surplus of India with USA is $1.3 billion. Some of the writings of political analysts (Ashutosh Varshney, Pratap Bhanu Mehta), trade experts, economists (Arunkumar) and agricultural economists raised concerns over the interim agreement and its unilateral direction. One of such concerns is with the increased duty-free imports of agricultural goods from USA the trade surplus may come down in the long term though occurrence of the same in the short run is invisible at this point of time. This concern has its roots in the unilateral assertions of USA made in reducing or eliminating the tariffs on its agricultural products to enter into the markets of India.

In 2024-25, the total agricultural products exports are US$ 51.9 Billion (Lok Sabha, 2026). India’s export of agricultural products in last decade have reached $48,804.52 million in 2023-24 from $32,089.43 in 2015-16. The total exports in horticulture stands at $2,257.17million in 2023-24 for the fresh fruits, fresh vegetables, fresh vegetables & seeds and floriculture. In 2023-24, the US has emerged as one of the top five export destinations for India in major horticultural crops and it is also the topmost nation wherein India is importing horticultural crops. The trend is consistent since 2019-20 onwards and the total imports of horticulture stand at $2,952.79million during the same period.

The Union Agriculture Minister Shri Shivraj Singh Chouhan pointed out that the “USA has made significant reductions in tariffs on many products in the agricultural sector. Tariffs that were previously up to 50 per cent on several agricultural products have now been reduced to zero by the USA. He mentioned that in the year 2024-25, India’s agricultural exports reached USD 4.45 billion. There has been an 88 per cent increase in spice exports. Now, following this trade deal, our spices will also gain a new and large market in the USA. (Press Release:Press Information Bureau, 2026)”.
Interim trade deal and its amendments

The joint statement said that “India will eliminate or reduce tariffs on all U.S. industrial goods and a wide range of U.S. food and agricultural products, including dried distillers’ grains (DDGs), red sorghum, tree nuts, fresh and processed fruit, certain pulses, soybean oil, wine and spirits, and additional products.” It also expressed that “India committed to buy more American products and purchase over $500 billion of U.S. energy, information and communication technology, agricultural, coal, and other products.” The list of the agricultural products that are subjected to the elimination or reduction of tariffs needs to be seen in the final agreement deal details that are scheduled to come out in the mid of March, 2026.

Has India is ready to give up its $1.3 billion surplus in Agriculture through its recent trade agreement with US thereby affecting the interests of the farming community? The US Secretary’s Brooke Rollins X statement might provide some plausible answer to this question, the post says

“New US-India deal will export more American farm products to India’s massive market, lifting prices, and pumping cash into rural America. In 2024, America’s agricultural trade deficit with India was $1.3 billion. India’s growing population is an important market for American agricultural products and today’s deal will go a long way to reducing this deficit”.

It also thanked US President Donald Trump for delivering this deal as a boost for Americas farmers and it sees this deal as first victory on top of the dozens of deals for agriculture. The USA is clear and is looking to reduce its agricultural trade deficit by pumping its agricultural products into our country thereby directly affecting the interests of our own farmers in cotton, textile and other agricultural products. This has evoked quick and strong reactions from the farmer associations, trade unions and opposition political parties. While replying to all such apprehensions and questions, the Union Agriculture Minister Shri Shivraj Singh Chouhan has said that

“with respect to agriculture and agricultural products, no compromise has been made on the interests of Indian farmers, and no product that could harm farmers has been included in the agreement. (Press Information Bureau, 2026)”.

The assertions of the Union Agriculture Minister are well taken; however, the point is whether these statements are borne out of the interim agreement or draft of the final agreement terms is unclear. This casts apprehensions and doubts on the clarity and assurance given by the Minister. Given these contradictory statements and assertions, the farming community is uncertain about the trade deal and its real impact on the agricultural development. The farmers’ association called for bandh on 12th February and the Union Government must hold talks to provide clarity and assurance. Failing to do so only catalyse the sense of insecurity among the farming community about the net outcomes of the trade deal. With its surplus of $1.3billion in agriculture, India shall have a decisive stand on the terms of conditions of the trade agreement rather than succumbing to the pressure of the US government.

Impact on Agricultural Development

The deal has better prospects for the exports of coffee, tea and mate, oil cakes, tobacco, cashew kernels, spices, sugar and molasses, raw cotton, rice, fish and fish preparations, meat and meat preparations, fruits and vegetables (avocados, bananas, guavas, mangoes, kiwis, papayas, pineapples shitake, and mushroom) and pulses and miscellaneous processed foods. It also includes copra and coconut oil, vegetable wax, nuts such as areca nuts, Brazil nuts, cashew nuts and chestnuts; cereals such as barley and canary seeds; bakery products; cocoa, and cocoa preparations; sesame and poppy seeds; and processed products such as fruit pulp, juices and jams.

The major agricultural exports of India to USA are marine products, spices, dairy products, rice-basmoti, ayush and herbal products, misc processed items, castor oil, processed fruits and juices, guegram meal and cereal preparations. The major agricultural imports of India from USA are fresh fruits, alcohol beverages, cotton raw including waste, vegetable oils, misc processed items, marine products, spices, processed fruits and juices, fruits/vegetable seeds and processed vegetables.

Table 1: India’s Major Agricultural Exports to United States of America (US$ in Millions)

Source: Government of India, Department of Commerce Department of Commerce

The information in Table 1 and 2 provides an overview of the major exports and imports of agricultural products. Overall, in major exporting items of agricultural produce have come down from $4901.6 million in 2021 to $4270 million in 2025. Importantly, the marine products exports have shown a declining pattern from $3256.4 million in 2021 to $2324.1 million in 2025 meaning the reduction of $932.3 million. The tea, coffee, dairy products and misc. processed items and cereal preparations exports have shown increasing trend from 2021 to 2025. The Year to Year growth of exports in agriculture from 2024- to 2025 clearly indicates that the decline of agrarian products exports share is more than the improved exports goods.

The Economic Survey 2025-26 has brought out the stark reality of the agricultural products and its exports scenario in the country. The agricultural exports increased from US$34.5 billion in FY20 to US$ 51.1 billion in FY25 with a compound annual growth rate of 8.2 per cent. It specifically highlighted that,

“Between FY23 and FY25, the country’s agriculture exports have stagnated… According to the WTO’s World Trade Statistics, the country’s share in global agricultural exports has increased only modestly from 1.1 per cent in 2000 to 2.2 per cent in 2024. This disparity between production value and export performance highlights the significant untapped potential for expanding trade in agricultural products (Government of India, 2026)”.

Given this stagnated exports in agriculture, opening up of Indian market to the USA agricultural products is counterproductive to the farmers in India. The opening of the Indian market without or negligible duty free or zero tariff for the imports of USA is far from the logic of economic efficiency. The trade deal could be non-favourable to the cultivators of apple, soybean and maize. India’s major importing agricultural products are vegetable oils (palm, soybean and sunflower), fresh fruits (apples, grapes/raisins, kiwis, figs, pears, dates, almonds, pistachios, walnuts and tree nuts), pulses (pigeon pea, black gram, red lentils, yellow/white peas), spices, cashew, raw cotton and natural rubber. The USA agri exports to India were $1.6 billion in 2024. including almonds (in shell, $868 million); pistachios ($121 million), apples ($21 million), ethanol (ethyl alcohol, $266 million).

Table 2: India’s Major Agricultural Imports from United States of America (US$ in Millions)

Source: Government of India, Department of Commerce Department of Commerce

The framework of the trade deal clearly stated that “India will eliminate or reduce tariffs on all U.S. industrial goods and a wide range of U.S. food and agricultural products, including dried distillers’ grains (DDGs), red sorghum, tree nuts, fresh and processed fruit, certain pulses, soybean oil, wine and spirits, and additional products”. This is the most debated aspect of the joint statement and the farmers organisations and associations raised serious objections to this statement.

The particular concern is the unspecified ‘additional products’. In addition to it, the import of dried distiller’s grains and soluble (DDGS), red sorghum is going to impact the farmers’ income of maize, jowar, soyabean, rice and other crops involved in the animal fodder and poultry. The import of soybean oil is certainly going to affect the farmers of Madhya Pradesh, Maharashtra, Rajasthan and Telangana. This would push them into further crisis given the less production and yield. The Jammu and Kashmir Chief Minister categorically mentioned that the Indo-USA trade deal is going to affect the apple growing farmers in the state along with the farmers of Uttarakhand, Himachal Pradesh and Arunachal Pradesh. The grapes cultivators in Karnataka, Maharashtra and Tamil Nadu states also going to lose their incomes given the arrival of USA grapes into the Indian market.

The reasons for this is of twofold; firstly, the apples and grapes grown by Indian farmers are incomparable to the apples grown in USA in the form of taste, quality and the price. When given an option the apple buyers might opt for the USA imported apples in the context of marketing and fancy attached to it. Secondly, the apple growing Indian farmers are left alone to compete with the USA imported apples. At the face of this, it is very attractive and accrues to the economic reasoning of increasing the competitiveness of the market. However, the fact of the matter is it pushes the Indian apple growing farmer to reduce the price in order to compete or match with that of USA imported apples.

The National Policy on Biofuels, 2018 with its amendment in 2022 fixed the target of 20 per cent blending of ethanol in petrol. The Government of India has initiated several schemes such as Ethanol Blended Petrol (EBP) Programme, Ethanol Interest Subvention Schemes (EISS) and “Pradhan Mantri JI-VAN (Jaiv Indhan- Vatavaran Anukool fasal awashesh Nivaran) Yojana” with an objective of incentivising of sugar mills, rice mills, distillers and farmers and to facilitate the necessary infrastructure for the ethanol storage and allied facilities. As of October, 2025 almost 20 per cent of the ethanol blending in petrol is achieved and the Government is advancing it further levels. This is pushing the rice, sugar, soyabean farmers into the ethanol production of which the cost of the cultivation is high in comparison to the traditional produces. In a way, it is commercialisation of agriculture from food efficiency as national priority to commercial interests of USA companies that are producing ethanol.

Areas for improvement

It would be too early to predict the actual impact of the India-USA interim trade framework with little finer details especially about the agricultural products. However, concerns are serious among the farmers, farmer’s organizations and the concerned citizens about the implications of the framework on the farmer’s welfare. The most significant aspect is the lack of reciprocity in terms and conditions of the proposed trade framework. The reading of the text gives an impression that India acceded more with little gains in terms of expanding its export basket for the agriculture. The real problem is unhidden or unspecified details on list of agricultural products including the mentioning of ‘additional products.

The farmer’s income among the rice, sugar, soyabean, apple and maize cultivators might see price fluctuations with high probability of losing rather than gain of income in the long run. The sensitive areas such as poultry, dairy and textile industries are set to gain betterment of incomes through this negotiated framework yet it needs to be wait and watch given the stagnation of agrarian exports since FY2023. Here also it is only the large farmers with huge capital can be assured of these gains; leaving the marginal, small and medium farmers at the hands of the middlemen. The Government of India needs to fine tune the trade deal agreement so as to benefit the marginal, small and medium farmers by extending the income support or social security scheme to those who are set to lose income.

The tactical retreat of China in terms of reducing its dependency on USA for its agricultural exports have some lessons for India. The strategic advantage of India in terms of agricultural products shall become advantageous to the farmers rather than compromising their income security and welfare. The trade deal announcement in social media rather than choosing legislative platforms reflects the trade populism of both nations. The time to celebrate is yet to arrive; for now, the trade path needs a calibrated and cautionary approach from India to strike a balance between trade competitiveness and domestic farmers interests.

(Author: Nayakara Veeresha, Assistant Professor,, Symbiosis Law School, Pune,, Symbiosis International (Deemed University), Pune.
Email: nayakaraveeresha[at]gmail.com; nayakara.veeresha[at]symlaw.ac.in )

References

Government of India (2026) Lok Sabha Unstarred Question No. 646 Target for Export of Agricultural Commodities, New Delhi: Ministry of Agriculture & Farmers Welfare
Government of India (2026). Economic Survey 2025-26 Department of Economic Affairs, Economic Division, Kartavya Bhavan-1, New Delhi: Ministry of Finance
Government of India. (2025). Promoting India-US Agricultural Trade under the new US Trade Regime by Raka Saxena and Ramesh Chand, New Delhi: National Institution for Transforming India (NITI) Aayog
Government of India (2023) India-USA Trade Brief, New Delhi: Ministry of Agriculture & Farmers Welfare: Department of Agriculture & Farmers Welfare

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