Agricultural Trade Showdown: The U.S.-India Dynamic in Focus
U.S. Commerce Secretary Howard Lutnick criticized India’s trade policies concerning agricultural imports, emphasizing the importance of opening markets amid increasing tariffs. Despite India’s agricultural success, challenges in productivity and market access persist. Trade discussions must balance U.S. goals against India’s agricultural needs while maintaining protection for its farming sector.
United States Secretary of Commerce Howard Lutnick recently questioned why India would not purchase American corn, criticizing its trade policies and market restrictions. Lutnick urged India to open its agricultural market and suggested using quotas to facilitate this process. Agriculture has become a critical issue in President Trump’s intensifying trade conflict, with impending reciprocal tariffs set to commence on April 2nd.
President Trump has persistently labeled India as a “tariff king” and a major violator of fair trade practices. Washington has long advocated for increased access to India’s agricultural market, viewing it as an untapped resource, while India has staunchly defended its agricultural sector to promote food security and protect small farmers. Despite significant progress transforming from a food-deficient to a food-surplus nation, India faced ongoing challenges in agricultural productivity and market access.
Historically, India relied heavily on food aid during the 1950s and 1960s, but advances in agricultural practices allowed the country to achieve self-sufficiency in food production and establish itself as the largest milk producer globally. Today, India successfully supports its population of 1.4 billion and ranks as the eighth-largest exporter of agricultural products, distributing grains, fruits, and dairy internationally.
However, productivity in Indian agriculture remains low, exacerbated by small landholdings and minimal infrastructure. Approximately half of India’s workforce is employed in agriculture, contributing only 15% to the national GDP, compared to less than 2% of the U.S. population engaging in farming. Furthermore, India’s small farmers average less than one hectare of land, while American farmers manage over 46 hectares.
Considering India’s high tariffs on agricultural imports, which vary from zero to 150%, the weighted average tariff on U.S. farm products is approximately 37.7%, in stark contrast to the 5.3% on Indian products imported by the U.S. Bilateral agricultural commerce between India and the U.S. is modest, valued at $8 billion, with India exporting primarily rice, shrimp, honey, and spices, while the U.S. exports nuts and fruits.
As India negotiates a trade agreement with the U.S., experts note that Washington desires to push for substantial agricultural exports like wheat and corn to address its $45 billion trade deficit with India. However, reducing Indian farm tariffs and allowing imports of genetically modified crops could threaten India’s small farmers, especially as U.S. agriculture is heavily subsidized, creating an uneven competitive landscape.
The difference in agricultural systems between the U.S. and India is stark; U.S. farming is commercial, while India predominantly practices subsistence farming. According to experts, the agricultural challenges faced by India are partly self-imposed, marked by chronic underfunding, receiving less than 6% of investment for necessary infrastructure and machinery.
To safeguard millions of livelihoods, India’s government employs import duties and price supports on crucial crops. Yet, low confidence persists, exemplified by recent farmer protests for improved prices and legal protections. Navigating trade discussions, India must balance U.S. agricultural interests with domestic farming imperatives, ensuring protection for its rural economy and food sovereignty.
Moving forward, experts argue that India ought to resist U.S. pressure to liberalize its agricultural sector, protecting its interests and food security. In the long run, modernization and competitiveness in agriculture are paramount to enhancing exports. Although India may consider temporary concessions to appease U.S. demands, it must negotiate from a position of strength, maintaining steadfastness to protect its rural backbone. Ultimately, the effectiveness of India’s strategy will rest on careful diplomacy, as timing and patience prove critical in achieving favorable trade outcomes.
The ongoing trade discussions between the United States and India feature agriculture as a central theme, with Secretary Lutnick urging India to open its markets. Despite America’s push for increased agricultural exports, India faces significant internal challenges, including low productivity and ongoing structural issues within its farming sector. The imperative for India is to safeguard its agricultural interests while exploring avenues for modernization and competitiveness, ensuring that negotiations do not undermine the livelihoods of its farmers or the food security of its population.
Original Source: www.bbc.com
Post Comment