India-US Trade Deal: A Detailed Analysis of Agricultural Impacts
New Delhi: The recently announced India-US interim trade agreement has been structured to safeguard the interests of Indian agricultural producers while opening specific export opportunities. Commerce Minister Piyush Goyal emphasized that the deal fully protects farmers and the dairy sector, with India maintaining restrictions on imports of sensitive items including meat, poultry, dairy products, soybean, maize, cereals like rice and wheat, sugar, and millets from the United States.
Protected Sectors and Export Opportunities
Indian growers stand to benefit from zero-tariff access to the US market for several products. Spices, tea, coffee, copra, coconut oil, and various fruits and vegetables can now be exported duty-free, potentially boosting India's agricultural exports. The agreement specifically eliminates or reduces tariffs on US food and agricultural products entering India, including dried distillers' grains (DDGS), red sorghum for animal feed, tree nuts, fresh and processed fruit, soybean oil, wine, and spirits.
The DDGS Conundrum: Potential Indirect Impacts
While direct imports of major US crops remain restricted, the inclusion of distillers dried grains with solubles (DDGS) presents a complex scenario. DDGS, a protein-rich by-product of ethanol manufacturing used as animal feed, could indirectly affect Indian farmers and ethanol producers.
US ethanol production predominantly uses genetically modified corn, creating DDGS that competes with domestically produced DDGS from non-GM corn and rice. Duty-free imports may pressure local ethanol manufacturers already facing excess capacity and potentially lower maize prices for Indian farmers. Furthermore, as DDGS substitutes soy meal in animal feed, imported volumes could impact pricing for Indian soy growers.
Industry perspectives vary on this issue. An anonymous ethanol manufacturer noted that imported DDGS might land at ₹24-25 per kg, slightly above domestic prices but subject to volatility. Vijendra Singh, President of the All India Distillers' Association, expressed confidence in India's domestic industry while emphasizing the need for alignment with India's E20 blending roadmap and feed security considerations.
Fruits and Vegetables: Mixed Reactions from Growers
The agreement introduces nuanced changes for fruit imports. While import duty on US apples has been reduced from 50% to 25%, the Minimum Import Price has increased from ₹50 to ₹80 per kg, likely raising landed prices to approximately ₹100 per kg. Quota restrictions on imports remain in place.
Apple growers from Himachal Pradesh and Jammu & Kashmir expressed cautious relief. Harish Chauhan of the Sanyukt Kisan Manch noted that while not fully satisfactory, the deal prevents zero-duty imports that would have been more damaging. Conversely, fruit exporters welcome zero-tariff access to the US market, which Ekram Husain of VAFA Fresh Vegetables and Fruits Exporters Association believes will enhance India's price competitiveness and encourage production expansion.
Seafood Exports Receive Significant Boost
The reduction of tariffs on Indian seafood exports to the United States represents a major victory for the sector. As India's largest seafood export market, the US accounted for $2.68 billion of India's $7.39 billion marine exports in 2024-25, with frozen shrimp comprising a substantial portion.
Previous tariffs reaching 59.7% had disadvantaged Indian exporters compared to competitors like Ecuador. KN Raghavan of the Seafood Exporters Association of India anticipates regaining lost market share, with lower tariffs expected to improve price realization, stimulate production increases, and support aquaculture farmers through greater investment in processing capacity.
Nuts and Dry Fruits: Structural Market Changes
The trade deal is poised to transform India's nuts and dry fruits market through reduced import duties. According to the Nuts and Dry Fruits Council (India), easing duty barriers will enable importers to shift from opportunistic buying to planned, year-round sourcing of US products, particularly almonds, walnuts, pistachios, cranberries, and blueberries.
This transition is expected to:
- Improve product availability and reduce supply volatility
- Encourage greater usage by food processors, bakeries, and snack brands
- Potentially lower retail prices, especially for almonds and walnuts
Gunjan Vijay Jain, President of the Council, acknowledged that zero-duty imports might create short-term pricing pressure in categories with domestic production like walnuts and cashews. However, he emphasized that imports primarily supplement demand unmet by domestic supply in terms of volume, consistency, and grading, potentially expanding the overall market rather than displacing local farmers.
Soybean Oil and Non-Tariff Barriers
The agreement's impact on soybean oil imports remains uncertain. India currently imposes 16.5% duty on crude soy oil and nearly 36% on refined soy oil, with most imports originating from cheaper South American sources. The extent of duty reduction for US soybean oil will determine its competitiveness in the Indian market.
Additionally, India has committed to addressing non-tariff barriers to US food and agricultural products, which may involve adjustments to import quotas, quantities, and product safety standards including those related to genetically modified organisms.
The India-US trade agreement thus presents a multifaceted landscape for Indian agriculture—protecting core farming interests while creating both challenges and opportunities across different sectors through carefully negotiated tariff adjustments and market access provisions.
