India Should Reinvent Agriculture Sector To Counter Tariff Threats And Trade Challenges

Very cleverly, the developed countries give an impression of being an open market while in reality they seek protection from imports at every possible opportunity

In a joint address to the US Congress, President Donald Trump said: “Whatever they tariff us, we will tariff them. Whatever they tax us, we will tax them. If they use non-monetary barriers to keep us out of their markets, we will do the same.”

That’s not fair. This is no diplomacy. It is plain bullying.

But there is nothing to unnecessarily panic. While the Indian government is keeping a close watch on the threatened spate of reciprocal tariffs to be announced by the US Administration on April 2, the threat in reality, whether we like it or not, will only help bring down the curtains on globalisation, which in any case has been under fire.

Again, as I said earlier, there is nothing to panic at least as far as agriculture is concerned. I have seen many mainline economists already bending backwards by wanting India to suitably amend the policy space to adjust to the unfair tariff retaliation that the US is getting ready to unleash. These are the same people who had earlier been on the vanguard of espousing the developed country trade interests all through the numerous phases of the World Trade Organization (WTO) negotiations. So let us not succumb to an atmosphere of fear psychosis that these voices are trying to create.

Lest one forgets, every disaster is an opportunity. While the negotiations for a broader and bigger bi-lateral trade between India and the US are already in progress, it has to be carefully negotiated in a manner that the talks do not end up decimating domestic agriculture. In fact, the ‘tariff war’ provides India an ample opportunity to set its house in order. And when I say setting its house in order, I don’t mean India should be making way for an aggressive onslaught that the US is likely to inflict by way of its unfair trade practices.

Just think of it. The so called ‘fair and retaliatory tariffs’ that Trump threatens the world with actually provides India an ample opportunity to pursue with atmanirbharta in agriculture. It’s time for India to throw away the proposed corporate yoke in farming, and redesign the farming practices in a manner that is sustainable and economically viable.

Moving away from the Green Revolution, the environmentally-damaging impacts of which are quite visible, let’s use Trump’s threat perception to build on the virtues of an Evergreen Revolution, with the underlying objective of rebuilding a healthy environment, healthy consumers and wealthy farmers. If it is ‘America First’ policy for Trump, let us rise to the occasion to counter it with an ‘India First’ approach, and also back it up with suitable policy strategies.

But before we spell out the contours of an Evergreen Revolution that lays out a strong foundation for rebuilding the economy, let’s first look at the trade implications. I can understand why the industry is in jitters, though there is no reason why agriculture has to bear the brunt, if any.

To the US farmers, Trump said: “To the great farmers of the United States: Get ready to start making a lot of agricultural product to be sold inside of the United States. Tariffs will go on external product on April 2. Have fun!”

Similarly, if the Chinese President Xi Jinping can re-emphasise on the need to rebuilding food self-sufficiency, I think there is no reason why India cannot stand up and say that it would utilise this opportunity at recasting agriculture to ensure the country is eventually free from hunger and malnutrition.

Amidst all the fears that the mainline economists are spewing, I found an interesting analysis by trade expert Murali Kallummal, formerly of the Centre for WTO Studies, in New Delhi, on the Linkedin. Demystified the US claims of high Indian tariffs on agriculture, he informs that the US is among the top nine countries that block agricultural imports using non-tariff barriers (NTBs).

While most developed countries claim low import tariffs, the unusually high NTBs (also referred to as non-tariff measures) on an average restricts 60 per cent of agricultural exports. The US for instance applies 9,048 NTBs against 617 by India. And going by Trump’s earlier warning: “...If they use non-monetary barriers to keep us out of their markets, we will do the same,” does it not mean that India too can retaliate with an equal number of NTBs, and why not?

Murali further says the global NTBs have multiplied over the years. Between 1995 and 2024, the number has increased to 75,000. It ensures that ‘markets have low tariffs while keeping the perceived low quality exports of developing countries out of the domestic territory’.

This is done primarily in the name of ensuring consumer health and environment protection. Very cleverly, the developed countries give an impression of being an open market while in reality they seek protection from imports at every possible opportunity.

He adds: ‘India has a relatively low number of non-trade measures, but a moderately high MFN (Ad Valorem) applied tariffs. While India’s tariffs are high and restrictive, the US and EU also have complex tariff systems with specific duties that are non-transparent.”

In a response, an expert comments that over the past 15 years, the US has on an average imposed 3.9 times more non-tariff measures that impacted India adversely.

Also the US has been providing huge subsidies under its Aggregate Measure of Support (AMS) category that are used with impunity to flood export markets with cheaper products. If for a developing country like India, the AMS obligation is 10 per cent, for the developed countries like the US it stands at five per cent, but is violated considering the commercial importance and export potential it has.

So let us not be cowed down by the US threat. India has ample scope to hit back at least and ensure that a level playing field in maintained. The only precaution being that India must ensure it listens more to trade experts rather than being swamped by dominant economic opinion.

While the tug of war on bi-lateral trade between the two giants can continue, I think it is time to bring back the focus on reinventing Indian agriculture.

We need a viable and profitable agriculture to confront the trade challenges. And that can only happen if we don’t open up under pressure to unwanted imports.

(The author is a noted food policy analyst and an expert on issues related to the agriculture sector. He writes on food, agriculture and hunger)