The trade deal being negotiated with the US is set to benefit India’s agriculture exports, the same way trade liberalization in the last 25 years has helped Indian farm exports grow faster than global agricultural trade, Ramesh Chand, member, Niti Aayog has said in an interview.
Chand told Mint that the India-US deal is set to help meet rising domestic demand for items like edible oils and nuts that cannot be met entirely locally, while also opening up market for India’s surplus farm produce including rice.
Chand said it may be early to comment on possibility of El Nina conditions developing later this year, but farm sector output is expected to grow faster than the projected 3.1% growth for FY26, in the next financial year, barring any major shocks.
Chand said continued trade liberalization and internal reforms will maximize the potential of India's increasingly diversified and resilient agriculture sector, with higher exports and farmer prosperity. Even after the deal is in place, India will maintain its agriculture and overall trade surplus with the US, Chand said.
Export advantage
“We will get a big advantage in the US market for our fish exports. Already we are a big rice exporter to that nation. They love our fruits, including mangoes and pomegranates. This deal will ensure that the preference US gave to other countries through trade deals, for example, Bangladesh will get considerably diluted,” said Chand. Liberalizing trade at a faster pace than in the past will deliver large benefits for the farm sector, he added.
India’s agriculture exports grew from about $5.3 billion to $52 billion in the last 25 years, faster than the sector's global trade in the period, Chand explained, citing the favourable effects of opening up of the Indian market in the globalization era.
“Trade liberalization is beneficial for Indian agriculture exports. Regarding the US deal, we must assess it by comparing it to a "no deal" situation. The US accounts for one-fourth of global consumption. Punitive tariffs of 50% will damage our existing exports. The current deal means the tariff will be around 18%, which is a significant reduction from 50% and even offers a slight advantage compared to our competitors like Malaysia, Vietnam, Thailand, or Bangladesh,” said Chand.
“The finer details of the deal are still being worked out, but the major public announcements indicate that dairy is protected and has not been liberalized. My personal view is that India's dairy sector is competitive, but due to concerns that small holders might not be able to compete, dairy is exempt from liberalization in both the US and EU deals. We will not be importing genetically modified soya bean or corn.”
The Niti Aayog member pointed to how the import of Distillers Dried Grains with Condensed Solubles (DDGCS), a protein-rich animal feed made from the dried residue left after producing ethanol from grains, can step up the diary sector’s cost competitiveness.
The idea is to lower cost of feed in the dairy industry. Duty free imports of such items may be subject to a quota system, Chand said, adding that these details are being worked out by both the countries.
Import dynamics
India imports over 50% of its edible oil requirements, Chand said, citing an example of how the trade deal will help consumers.
Elsewhere, he explained that items like apples, almonds, and dried fruits are imported into India as domestic demand outpaces the growth in output.
The demand for nuts and dried fruits has increased by 250% in 10 years, he said, adding that domestic production cannot keep pace.
“Imports fill this gap, taking care of people's nutritional needs. Imports are only a threat if they come at a cheaper rate than domestic products. For US apples, they sell at least 50% higher or even double the price of our Himachal and Jammu and Kashmir apples. They are generally consumed by high-income groups and primarily fill the seasonal gap in April-July when domestic apples are less available or are of lower quality. There is no direct competition to our local produce, and we should be exporting our own apples if we have a surplus. It's not that the interest of apple growers has not been considered; it has been considered fully,” said Chand, an agricultural economist.
The US deal, he said, shows a pragmatic call in an uncertain global situation where the US has diverged from WTO’s concept of most favoured nation, which assured of no discrimination in world trade.
Indian agriculture now has a very diversified base, Chand said, explaining, how it has become more resilient to weather shocks.
“The dominance of field crops such as cereals, pulses, oilseeds, sugar cane and cotton etc. has come down," he said. They now account for only a little more than one-fourth of the total agriculture output.
The growth rate for field crops is less than 2%. However, horticulture is growing faster, livestock (dairy, poultry meat) is growing faster at 5-6%, and fishery at 8-9%. These growing sectors are not very sensitive to climate events like El Niño, which means Indian agriculture has acquired resilience. In the last 11 years, there hasn't been a single year when agriculture growth was negative, which demonstrates this resilience,” said Chand.
Chand’s comments on India benefiting from the trade deal in both agriculture and overall exports comes after the Opposition congress party slammed the deal as ‘total surrender’ to the US in a Parliament debate last week. Chand declined to comment on Opposition’s views.