INDIA'S AGRICULTURAL EXPORT RESILIENCE AND TRADE POLICY

Why in the news?

Despite US tariff challenges, India's agricultural exports rose 2.3% to $42.26 billion during April–February 2025–26, driven by strong demand for rice and marine products.

What is the Recent Trend in India’s Farm Exports?

Resilient Growth: India’s agricultural exports grow by 2.3% year-on-year in 2025-26, reaching $53.1 billion.

Outperforms Overall Merchandise: Farm export growth (2.3%) surpasses India’s overall merchandise export growth (0.9%).

Shrinks Trade Surplus: India’s agricultural trade surplus narrows to $12.7 billion (from a peak of $27.7 billion in 2013-14) because import volumes (edible oils, pulses, fresh fruits) grow faster than exports.

Turns Net Importer in Cotton: India shifts from a leading cotton exporter to a net importer of raw cotton due to domestic yield stagnation.

Why US Tariffs Pose a Challenge to Indian Exports?

Imposes Reciprocal Tariffs

The US administration implements reciprocal tariffs under its "America First" policy to counter foreign trade barriers and balance the US trade deficit.

Targets Tariff Disparities

The US penalizes India for its high protective agricultural tariffs. India maintains a simple average tariff of 39% (and trade-weighted 65%) on agriculture, compared to the US's 5%.

Escalates Duties Sharply

The US raises tariffs on Indian goods from 10% to 25%, and subsequently imposes a 50% penalty tariff (effectively reaching 58.26% on items like shrimp).

Threatens Major Export Sectors

Tariffs directly hit India's price competitiveness, triggering sharp export declines to the US in marine products (frozen shrimp), basmati rice, spices, and processed foods.

Creates Livelihood Crisis

The 50% tariff threatens the livelihoods of millions of smallholder farmers and workers in highly export-dependent states like Andhra Pradesh (which accounts for 80% of India's shrimp exports).

How Indian Farm Exports Continue Growing Despite Tariff Barriers?

Executes Market Diversification

Indian exporters shift away from the US market to offset losses. They  redirect shipments to alternate markets in Asia, Europe, and the Middle East.

Offsets US Losses in Seafood

Exporters ship marine products to China, Vietnam, Japan, Thailand, and the European Union, pushing total marine exports to a record $8.4 billion (a 13.9% growth) despite the US tariff wall.

Expands Buffalo Meat Exports

India captures higher demand in Vietnam, Egypt, Malaysia, and the UAE, lifting buffalo meat exports by 25.6% to a record $5.1 billion.

What Factors Have Driven the Resilience of India’s Agricultural Exports?

Capitalizes on Global Supply Disruptions

India doubles its coffee exports to over $2 billion, taking advantage of low global stocks and poor harvests in major producing nations like Brazil and Vietnam.

Benefits from Favorable Monsoons

Consecutive good monsoons drive a rebound in domestic farm production.

Removes Export Restrictions

Indian government lifts export bans and curbs on non-basmati rice (imposed earlier to control domestic inflation), revitalizing rice export volumes.

Maintains Competitive Pricing

Indian exporters retain structural price competitiveness in labor-intensive and agro-processing sectors due to large-scale output.

Which Challenges Continue to Affect India’s Farm Exports?

Non-Tariff Barriers (NTBs)

Developed nations impose strict Sanitary and Phytosanitary (SPS) measures and Maximum Residue Limits (MRLs). India faces frequent shipment rejections in the EU and Japan over pesticide residues and pests.

Low Value Addition

India exports primary commodities. Processed agricultural exports constitute only 20.4% of the total, keeping India behind competitors like China (50%) and the US (25%).

WTO Subsidy Disputes

Developed nations (US, Canada, Australia) challenge India's Minimum Support Price (MSP) policy at the WTO, accusing India of breaching the 10% Amber Box limit for trade-distorting subsidies.

Policy Inconsistency

Frequent domestic policy shifts—such as sudden export bans on wheat, sugar, and onions to control inflation—disrupt supply chains and erode India's reliability as a global supplier.

High Import Dependence

India relies heavily on imports, spending on vegetable oils ($19.5 billion), pulses, and fresh fruits, draining foreign exchange and narrowing the trade surplus.

What Should Be India’s Way Forward to Sustain Agricultural Export Growth?

Promote Phased Tariff Reductions

India must negotiate reciprocal tariff relief with the US (like the recent cuts to 18%) by selectively lowering its own outlier tariffs on items like apples, walnuts, and specific dairy products.

Accelerate Free Trade Agreements (FTAs)

Fast-track trade pacts (e.g., India-UK CETA, EU-India FTA) to secure zero-duty access and level the playing field against competitors like Vietnam and Ecuador.

Invest in Agri R&D and Yield Enhancement

Shift the focus from tariff protectionism to productivity-driven competitiveness. India must repurpose fertilizer subsidies into agricultural R&D, seed technology, and precision farming to close global yield gaps.

Drive Product Diversification and Value Addition

Move up the value chain from raw commodities to ready-to-cook, breaded, and seasoned products. Enhance investments in food processing, cold-chain logistics, and Individual Quick Freezing (IQF) facilities.

Strengthen Biosecurity and SPS Compliance

Establish robust traceability-linked production systems, promote antibiotic-free aquaculture, and upgrade Export Inspection Agencies (EIA) to meet global health and safety standards.

Ensure Predictable Trade Policy

Maintain a stable export environment by using price-linked export windows instead of abrupt, blanket export bans, encouraging long-term capital investment in agriculture.

Conclusion 

India’s farm export performance highlights that diversification, competitiveness, and adaptive trade strategies can sustain growth even amid rising protectionism and tariff barriers.

Source: INDIANEXPRESS