Indian agriculture: Under threat from Trump’s tariff moves and weak domestic economic policy

By Dr Narasimha Reddy Donthi

United States President Donald Trump accused India of high tariffs and said it prevents them from exporting agricultural produce to India. He further claimed that several other countries are also facing similar problems regarding agricultural trade with India.

The annual US Trade Estimate Report for 2025 said: ″To manage domestic oversupply, the Indian government began imposing quantitative restrictions on imports of various pulses in 2017, based on local supply and demand conditions. In February 2022, India issued a notification to restrict the import of mung beans until 31 March 2023, but imports of most pulses are now allowed without any quantitative restrictions.″

These insinuations imply that India does not import agricultural produce and is difficult to trade with. In fact, for Indians, in recent years, a major worry has been that India is increasingly becoming a net importer of agricultural produce. How and why are they increasing? Its agricultural exports are declining and imports are increasing.

Pulse production in India

India’s pulse production fell from 19.25 million metric tonne (MT) in the Financial Year (FY) 2013-14 to 17.3 million MT in 2014-15. It further reduced due to subsequent drought years in 2014-15 and 2015-16. From then on, every year India has been importing pulses. Pulses imports have not stopped despite good production.

In 2015, when prices of pulses were high, farmers resorted to sowing them in 2016. However, farmers did not get a decent price since the government restricted procurement, which is cited as a barrier by the US.

In the Harda district of Madhya Pradesh, the market price dropped from ₹70,000 per tonne in May 2016 to around ₹35,000 in October 2016, owing to imports and procurement restrictions. In Gujarat, Maharashtra and Rajasthan, the market price for moong has crashed to below ₹30,000 per tonne.

Government estimates revealed that it has procured only 3,300 tonnes from 330 farmers in 200 centres in Karnataka, Telangana, Maharashtra, Andhra Pradesh and MP— only about 16.5 tonnes from each centre. The oversupply was because the government did not show enough flexibility — when the domestic production was high — regarding restricting imports and facilitating exports.

The government increased pulse import from 4.5 million MT in 2014-15 to 5.8 million MT in 2015-16. In April-July, 2016, India imported around 1.26 million MT of pulses spending more than ₹6,000 crore. Imports further rose to 6.6 million MT in 2017, followed by 5.6 million MT in 2018. Imports continued in 2023-24 at 4.7 million MT. Continuing and increasing imports is followed additionally by placing restrictions on procurement limits.

In the case of Tur, Masoor and Urad dals, the procurement limit of 25 percent of the actual production was lifted only for the years 2023-24 and 2024-25.

Demand and supply

Without referring to shortages, rising prices of pulses for consumers, the gap between demand and supply, the impact of extreme weather conditions on pulse production, mandatory imports and restrictions on procurement, the government routinely declares that all India production of pulses has increased from 163.23 lakh tonnes during 2015-16 to 244.93 lakh tonnes during 2023-24 (according to 3rd Advance Estimates).

However, it never tells us that farmers are not getting good harvest prices, while imports continue and restrictions on procurement continue.

The Government of India seems to have secretly placed its faith in the economic theory that imports can address domestic deflationary trends. Publicly, it keeps proclaiming that India will achieve self-reliance, even as it takes the opposite path — depending on imports.

India’s pulses imports in fiscal 2024 surged 84 percent Year-over-Year (Y-o-Y) to their highest level in the last six years. The import of pulses was duty-free in 2014 and 2015, leading to a record import of 6.6 million MT in 2016-17.

However, India allowed duty free imports of red-lentils and yellow peas. Decreasing production and the government’s decision to remove import duties to bring down prices are key reasons for the surge in imports.

Pulse imports are mainly from Canada, Myanmar, Australia, Mozambique and Tanzania. In FY 2023-24, imports of red lentils (Masoor) from Canada have more than doubled to about 1.2 million MT.

″Pulses and edible oils in India are imported by the private sector and not by the government,″ Minister of State for Agriculture Gajendra Singh Shekhawat said in a written reply to Lok Sabha. This is another understatement — without an enabling environment, the private sector would not take the risk of importing pulses.

Imports and exports

India was the largest producer, consumer and now imports of pulses globally. Indian accounts for nearly 27 percent of global pulse consumption. Statistics say that India produces about 25 percent of the world’s pulses.

India also amounts to 15 percent of the global trade in pulses, both as an exporter and an importer. In FY 2023, India imported $37 billion worth of agricultural and related products from the world. In the past five years, India’s imports have grown substantially, up by $12.5 billion (51 percent) from FY 2019.

India is ranked as the eighth largest global importer of agricultural and related products. With pressure from the US, European Union (EU) and other countries, and our own domestic hollowed thinking, India is set to lose its primacy in pulses and other products such as cotton and turmeric.

In 2018, Indian Government had hired Price Waterhouse Coopers (PwC), a multinational professional services network, as consultant to advise it on efficient management of buffer stock of pulses that is being created for use in times of price rise.

It set up an Empowered Committee under the Secretary, Department of Food & Public Distribution, comprising Secretaries of the Department of Commerce, Department of Agriculture, Cooperation & Farmers Welfare, Department of Revenue, Department of Consumer Affairs and DGFT to regularly review the export/import policy on pulses and consider taking measures depending on domestic production and demand, domestic and international prices and international trade volumes.

However, there is no publicly available information on what PwC and the Empowered Committee have been advising the government. It declared that during the FY 2015-16 and 2016-17 a buffer stock of about 20.50 lakh tonnes of pulses — 16.71 lakh tonnes procured domestically and 3.79 lakh tonnes imported — has helped in moderating the prices of pulses.

It is clear Indian government believes imports can moderate pulse prices, both in the short term and long term.

Similarly, in 2023, to control and ease the prices of edible oils in the domestic market, the Government of India:

• Reduced the basic duty from 2.5 percent to Nil on Crude Palm Oil, Crude Soyabean Oil and Crude Sunflower Oil. The Agri-cess on Oils was brought down from 20 percent to five percent.

• Reduced basic duty from 17.5 percent to 12.5 percent on Refined Soybean oil and Refined Sunflower Oil was rationalised on 15.06.2023. Similar action was taken in 2021.

• Import of Refined Palm Oils under the free category has been extended until further orders.

Change in agriculture imports

India’s agricultural imports have seen significant changes since 2014. In 2014-15, these imports accounted for 4.43 percent of India’s total imports, amounting to ₹1.21 lakh crore, up from 2.09 percent or ₹29,000 crore in 2008-09.

By 2015-16, agri imports further increased to 5.63 percent or ₹1.4 lakh crore. India’s imports of edible oils have been substantial, with vegetable fats imports topping $20 billion in 2022-23, though the value dropped to below $15 billion in 2023-24 due to lower global prices. In the case of cotton also, India turned from a net exporter to a net importer, with imports rising by 64.6 percent to $1.64 billion in April-December 2022 from $996.49 million in the same period in 2021.

Government has been procuring less, by claiming higher production of various crops. Hiding shortages and lower procurement, government is fuelling imports by showing deflation as an outcome. Gradually India is losing its domination in production of many crops, including pulses, oils, wheat, turmeric and cotton.

Due to a lack of remunerative prices, Indian farmers are shifting to crops where they get some decent income. The latest Economic Survey (2024-25) makes a terse recommendation: ″Farmer support policies can benefit from a perusal of a report that the OECD put out in November 2024.″ According to this OECD report, Indian farmers are negatively supported. It means, overall, after all, kinds of budgetary allocations, farmers are not getting on-par returns and consistently losing out, ending up in debt. In 2002-03, this producer support estimate was -2.31, which increased to -19.03 in 2022.

On the other hand, the United States PSE was a high of 20.35 in 1986-88, which became 10.38 in 2021. The United States is the world’s second-largest agricultural trader, after the European Union. US agricultural exports and imports increased significantly over the last 25 years (Figure 28.5, top panel). The leading US agricultural exports are grains and feeds, soybeans, livestock products, tree nuts, fruits, vegetables, and other horticultural products.

India’s imports

On 5 September 2023, the Ministry of Finance lifted retaliatory tariffs imposed in 2019 on certain agricultural products of US origin. This includes products such as almonds, apples, chickpeas, lentils, and walnuts. In December 2023, India exempted imports of yellow peas from customs duties (set at 10%) and the domestic tax Agriculture Infrastructure and Development Cess (40%) through 31 March 2024.

India is a consistent net agro-food exporter, with agro-food exports representing 10.4 percent of total exports. However, agro-food imports have until recently been growing faster than exports.

India’s agricultural imports are dominated by two commodities: Edible oils and pulses. The import bill for edible oils reached $20 billion in 2022-23.

Imports of pulses almost doubled to $3.75 billion in 2023-24, the highest since 2015-16 and 2016-17. India is set to import sugar in vast quantities.

Sugar imports were estimated to grow steeply by 385.4 percent from $252 million in 2022 to $1,223.4 million in 2023.

India’s agricultural imports from South Australia grew by 200 percent under a zero-tariff regime, and imports have increased in 2023 due to a decline in domestic production, which in turn has been caused by low prices for harvest and rising imports.

What farmers expect

India’s agriculture exports have risen 6.5 percent, from $35.2 billion in (April-December) 2023 to $37.5 billion in (April-December) 2024. There was an 18.7 percent rise in imports of farm produce (from $24.6 billion to $29.3 billion) for the same period.

As a result, the agricultural trade surplus has reduced from $10.6 billion in (April-December) 2023-24 to $8.2 billion for the corresponding nine months of 2024-25.

With Trump and the entire US administration piling pressure on India, the Indian government — which has been amenable to agricultural imports — is likely to succumb and trade away more of its advantages in agriculture.

Most probably Indian government is going to retaliate to the farmer’s agitation with able support of the US government, which acceded its agriculture to corporate monopolies long back.

With dumping of pulses, tree nuts, poultry products, ethanol, genetically modified products made out of maize, alfalfa and other crops, Indian agriculture is going to lose livelihoods, its sovereignty, self-reliance, environment and germplasm.

India should not trade away or put agriculture on the altar of trade-offs in negotiations with the US. India’s position needs to be transparently built, with support from farmers and farmers’ organisations. Indian government should not limit its consultations with trade bodies, exporters and Western influenced liberal economists.

This article was originally published on SouthFirst.