Agri trade takes centre stage as India, US cut tariffs under interim deal

New Delhi: As India and the US formalised a new trade agreement, both sides foresee strong potential for expansion in agricultural trade, despite long-standing differences over market access and tariffs.

As per the joint statement, Indian exports to the US will now be subject to an 18% tariff, a steep reduction from the earlier 50%, which had comprised a 25% reciprocal tariff and an additional 25% punitive duty linked to India’s procurement of Russian crude oil.

In return, India will cut or remove import duties on all US industrial goods and on several US food and agricultural products. These include dried distillers’ grains (DDGs), red sorghum used as animal feed, tree nuts, fresh and processed fruits, soybean oil, wine, spirits and several other items.

Dried distillers’ grains (DDGs), often produced as DDGS (with solubles), are a nutrient-rich, high-protein co-product of ethanol production derived from fermented corn. In trade terms, DDGs matter because the US is one of the world’s largest producers, and lower Indian tariffs would make this feed cheaper for livestock and poultry producers, while increasing competition for domestic feed ingredients such as maize and oilseed meals.

With the reduction in tariffs, the agreement is expected to significantly boost Indian agricultural exports to the US by improving price competitiveness. Industry experts say the move will help Indian farmers secure better price realisation, especially for products such as rice, seafood, fruits and processed foods.

In the recent past, talks had been stalled by market access concerns in the farm and dairy sectors. Among the key agricultural items that will benefit from the deal and be exported to the US are seafood, rice (basmati and non-basmati), spices, dairy products, honey and processed foods.

In the calendar year 2024, total agricultural trade between India and the US was over $6.2 billion, according to USDA figures, with trade largely in India’s favour.

India’s key agricultural exports to the US include seafood, particularly frozen shrimp, which accounts for a large share of shipments. According to exporters, the US is the largest market for Indian seafood and accounts for 36% of total marine product exports from India. India exported seafood valued at $2.78 billion in 2024–25.

This year, export volumes declined by about 6.3% in value terms and nearly 15% in quantity terms during April–November compared with the corresponding period of the previous year, due to the imposition of the 50% tariff from August 2025 onwards, according to exporters.

In absolute terms, India’s seafood exports fell during April–November 2025 compared to the same period last year. Export volumes declined to 201,501 metric tonnes in April–November 2025 from 236,061 metric tonnes in April–November 2024. In value terms, exports slipped to $1,720 million from $1,835.46 million a year earlier.

Prior to the announcement of tariff reduction on February 2, seafood exports to the US were subject to a cumulative tariff of 59.7%, including countervailing and anti-dumping duties of 9.7%, putting India at a disadvantage compared to competitor Ecuador, which faced a duty of only 19%.

Rice, including both basmati and non-basmati varieties, remains a staple export, with basmati being the major item. During April–November 2025, India exported around 2 lakh tonnes of basmati rice, up from 1.8 lakh tonnes in the same period last year. India exported 2.74 lakh tonnes of basmati rice to the US in FY25, valued at $337 million. Other items exported to the US include spices, dairy products, honey and processed foods.

The development assumes significance as agriculture and allied activities are expected to contribute 15.6% of India’s national income at current prices in FY26. The sector accounts for 46.1% of the country’s workforce. Given its large employment share, agriculture remains central to India’s overall growth trajectory.

Total US agricultural exports to India stood at $2.25 billion in 2024. Major US exports include tree nuts ($1.12 billion), ethanol ($420.89 million), cotton ($209 million), pulses ($73.4 million), essential oils ($67.2 million) and dairy products ($52.65 million). Farm shipments from the US to India remain smaller than India’s agricultural exports to the US.

Challenges

Besides high tariffs, non-tariff measures such as strict sanitary and phytosanitary standards also limit market access, particularly for sensitive products such as dairy and shrimp. This regulatory asymmetry has been one of the reasons agriculture emerged as a sticking point in negotiations.

With the trade deal, both nations are seeking mutually beneficial solutions that could further liberalise market access while shielding vulnerable producers—an equilibrium that will require sustained diplomatic engagement and careful trade policy calibration. As India pursues broader global market integration and the US seeks expanded export opportunities for its commodity producers, agriculture is likely to remain both a flashpoint and a driver of bilateral growth.

Earlier, amid opposition allegations, Union agriculture minister Shivraj Singh Chouhan stressed that the deal fully safeguards domestic agricultural interests, countering claims that increased market access could threaten local farmers. The government’s position reflects long-standing concerns in New Delhi about protecting livelihoods for millions dependent on farming. Chouhan reiterated that India’s staple grains, fruits, major crops, millets and dairy products remain fully protected and face no threat whatsoever.